Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — ENERGY

North Sea Oil

Mr. Marten: asked the Secretary of State for Energy when last he had discussions with the Norwegian authorities concerning North Sea oil and related matters.

The Minister of State, Department of Energy (Mr. John Smith): My right hon. Friend has not had an opportunity to do so yet, but he hopes it will be possible to meet Mr. Gjerde, the Norwegian Minister of Industry, before long. There have been frequent exchanges between officials, however, the most recent being a meeting between the Permanent Under-Secretary of my Department and Norwegian officials on 16th March.

Mr. Marten: In view of the disquiet, certainly in some Norwegian circles, that

there was an element of unfair competition in tendering for the supply of materials for British operations in the North Sea, may I assume that as a result of those talks at official level the "Buy British" policy will apply on these occasions on the basis of "all other things being equal", as it were, and that harmonious co-operation will continue between our two countries?

Mr. Smith: At the meeting to which I referred, full and fair opportunities for the industries of both countries on both sides of the line were discussed. The policy of the British Government is that our industries must receive a full and fair opportunity in the United Kingdom sector. We also hope that many of our companies will be able to obtain orders on the Norwegian side of the line, on the basis of their competence and proven reliability.

Mr. Gordon Wilson: The trade unions in Norway seem to have better access to offshore rigs and platforms than is the case in the United Kingdom. When is it likely that facilities similar to those that exist in Norway will be offered to trade unions in the United Kingdom?

Mr. Smith: The Government are certainly aware of the difficulty that faces some trade unions relating to access to offshore establishments for recruitment purposes. We are actively discussing this matter. I think that the hon. Gentleman is correct; there is a condition—how effective it is, I am not sure—in the Norwegian licensing.

Mr. Canavan: asked the Secretary of State for Energy what is the latest available figure for the total amount of oil extracted from United Kingdom oilfields in the North Sea.

Mr. John Smith: 1·81 million tonnes as at the end of February. Figures are published monthly in the Department of Energy's publication Energy Trends.

Mr. Canavan: Would the rate of extraction be substantially altered if the Government took firmer steps to favour British employment interests in North Sea oil contracts? In particular, as in the past we have managed to get only about one-quarter of the contracts for rigs, will my hon. Friend consider putting a ban on foreign rigs which do not measure up to our standards of safety and structural regulations?

Mr. Smith: When my hon. Friend talks about rigs, I think he is referring to mobile exploration drilling rigs. In case there is confusion, I ask the House to bear in mind the large number of contracts we have got for fixed production platforms. Of the 20 either installed or ordered in the United Kingdom, 14 have been built here and six abroad. Of the six which went abroad, four were for concrete platforms—the orders for which went abroad at a time when we did not have the capacity—and two were for steel platforms, made at a time when our steelyards were very severely stretched.
We did not do so well on our exploration rigs. The voluntary agreement with United Kingdom offshore operators which we negotiated is an important step forward, because it is now accepted that British goods will be ordered when they are competitive in price, quality and specification.
On the question of the safety of rigs, the Government have the power to ban any rig or platform which has not received a certificate of fitness——

Mr. Speaker: Order. Answers should be reasonably brief, just as the questions should be, as long as the question is answered.

Mr. Gordon Wilson: As the real benefit will come from the flow of oil rather than from the offshore jobs, what negotiations has the Minister of State had with the Scottish Development Agency and the

Scottish Trades Union Congress with a view to steering towards Scotland those Scottish resources which have been liberated by the oil flow?

Mr. Smith: Our concern is with the oil prospects in all parts of the United Kingdom. Scotland has a large share. Very lengthy discussions take place with the Agency through the means of the Offshore Supplies Office.

Mr. James Lamond: By how much money have the British people benefited by the extraction of this 1·81 million tonnes of oil?

Mr. Smith: Because of the taxation aspect, it is early days yet to assess the value. The costs of the installation have to be recovered before petroleum revenue tax flows. Revenues are coming in already. If my hon. Friend tables a specific Question, I shall try to answer it.

Mr. Sproat: Will the Minister of State take every opportunity to remind the Scottish National Party and the people of Scotland that two-thirds of the oil lies off Shetland, which has no wish to be attached to an independent Scotland or a Scottish Assembly—a fact that totally undermines the economic case made, in respect of oil, by the SNP?

Mr. Smith: The hon. Gentleman is correct to remind the Scottish National Party and the House of that fact. It would be great folly to make the assumption that if Scotland some day became independent Shetland would not stay with the United Kingdom.

Mr. Viggers: Does the Minister of State accept that one of the signal failures in offshire exploration has been the failure of the nationalised British Steel Corporation to win orders for underwater pipe?

Mr. Smith: It is regrettable that we were not able to obtain more orders for underwater pipe. However, credit must be given to the British Steel Corporation for obtaining a large share of the onshore work.

Oil Production Platforms

Mr. Skeet: asked the Secretary of State for Energy how many yards in the United


Kingdom are building production platforms; how many are currently looking for orders; and how many orders he anticipates are likely to be placed in 1976.

Mr. John Smith: Six United Kingdom yards are currently building oil production platforms. All United Kingdom yards are looking for further orders, although the timing of such orders varies in importance as between individual yards. The number of orders that may be placed this year is not yet certain. I am currently having talks with oil companies about their field development plans.

Mr. Skeet: Is the Minister aware, however, that he totally ignored the advice given during the passage of the Offshore Petroleum Development (Scotland) Act, when it was indicated that there would be over-capacity in the yards, and that about £24 million has been sunk or guaranteed and no orders have come? Will he indicate whether he intends to subsidise yards along the lines of Laing, or whether he wants the British National Oil Corporation to provide the necessary facilities?

Mr. Smith: I think that the most regrettable aspect of what the hon. Gentleman has said is his total failure to realise the damage done to this industry by its not having concrete platform production yards available in the past during the period when the party that he supports was in Government. We lost six orders—four for concrete platforms—at a time when we had little capacity to acquire them. The present Government have righted that situation. On the whole, we prefer to take the risk of providing the capacity rather than not having the capacity to meet very important orders for this country.

Mr. Gray: Does the Minister admit that the Government have made a serious error in their estimate of the number of yards required? Will he assure the House that the jobs and welfare of those already employed in established yards will not be put at risk through any question of Government intervention and direction towards yards in which they have invested money and which have not been able to attract any orders?

Mr. Smith: I think that it is far too early to pass comment on whether these

yards will be able to obtain orders, and when. We regard it as absolutely vital to establish concrete platform facilities. For one thing, it is still hard to determine the type of platform, and even individual oil companies are uncertain whether they will require steel or concrete platforms, because so much depends on the condition of the sea bed where the platform is to be located. For this purpose the Government will deal fairly with all yards involved. The important thing is that we are able now, on the concrete side, to offer a variety of range and design. We shall no longer suffer the under-capacity problems of the past. It is important to stress this matter, because I believe strongly that our yards, on both the steel and concrete sides, have become increasingly efficient over the years and can face competition with confidence.

Gas and Electricity Tariffs

Mr. Gwilym Roberts: asked the Secretary of State for Energy if he will issue general directions to the electricity and gas boards to ensure that, by computer programming, customers are always automatically charged at the tariff rate which will produce the lowest possible account.

The Under-Secretary of State for Energy (Mr. Alex Eadie): This would not be practicable, since for electricity the cheap off-peak tariffs are appropriate only for consumption at specified times, whilst for gas the system of optional tariffs requires that each tariff applies to a whole year's consumption.

Mr. Roberts: Does my hon. Friend accept, however, that it seems quite intolerable that quite a large number of people, as I understand it, are paying more than the tariff that they need to pay on the basis of their actual consumption? Will he accept from me that some of us who have had dealings with the minimisation problems in this area feel that the problem is not as difficult as he suggests?

Mr. Eadie: My hon. Friend will have to accept that both industries provide publicity to consumers on the choice of the right tariff, and any consumer who is still in doubt can seek advice from his local showroom. As regards my hon. Friend's general point, no representations


from the statutory consumer bodies for gas and electricity have been made to suggest that intervention by my right hon. Friend would be justified.

Coal Production

Mr. Peter Bottomley: asked the Secretary of State for Energy if he will list the average output per manshift for National Coal Board coal mines for the last five years.

Mr. Eadie: The overall average output per manshift in hundredweights for NCB coal mines for the last five years is:

1971
…
…
…
…
43·9


1972
…
…
…
…
43·8


1973
…
…
…
…
45·2


1974
…
…
…
…
42·8


1975
…
…
…
…
44·9

The 1972 and 1974 figures were affected by strikes.

Mr. Bottomley: I am grateful for that answer. Besides the low level of increase, taking a trend, what success have the Government and the Coal Board had in finding alternative employment in areas where there are low-output, high health risk and high-cost coalfields?

Mr. Eadie: If the hon. Member tables a Question to the relevant Secretary of State I am sure that he will be happy to answer him. If what prompted the hon. Gentleman's Question is concern about the general condition of the mining industry, I am happy to be able to tell him that there was an improvement in output per manshift in February, when the figure was 46·3 cwt. The Coal Board's projected target for 1976–77 is 46·5 cwt.

Mr. Patrick McNair-Wilson: Does the Under-Secretary agree that the fall in the international value of sterling and the effect this has on our oil import bill and, therefore, our balances of payments makes the need for a really effective coal industry more important than ever before? Does he further agree that the present productivity deal is a failure, in that the award has been paid only once? Will he urge upon all those concerned the need speedily to arrive at a productivity deal that truly reflects the tremendous effort made by so many people in the industry?

Mr. Eadie: I could not agree more with the hon. Gentleman that a very

strong and viable coal industry is in the best interests of this country. I have said before from this Dispatch Box that increased coal consumption can help Britain to fight back towards economic recovery. The question of the productivity deal is primarily a matter between the unions and the National Coal Board. The agendas for the various forthcoming conferences show that this is a matter that will be discussed by the unions in an attempt to resolve the problem the hon. Gentleman mentioned.

Mr. Cryer: Does my hon. Friend agree that the figures he has given show that productivity has increased? Will he assure the House that there will be no sacrifice of men's lives and limbs in the pursuit of productivity? Does he not agree that coal mining is one of the most dangerous of occupations, that the Opposition who make these criticisms have never dirtied their hands in their lives, either by mining coal or by doing anything else, and that safety first is the important motto for the mining industry and, indeed, for all other industries?

Mr. Eadie: There is certainly a great need to have a very efficient coal-producing industry. A study of the history—particularly the recent history—of discussions between unions, the Coal Board and the Government is rewarding. For example, my hon. Friend will find from a study of the document issued following the tripartite inquiry that was held when this Government came into office in 1974 that although the three parties engaged in a great many discussions relative to the progress the industry could make, one thing that was paramount in all the discussions was that safety was to be at the fore, and that coal must not be won at the expense of miners' lives.

Mr. Hannam: Is the Under-Secretary aware that in many other countries, including the United States of America, Germany, Poland and Russia, miners who have completed 25 years' service are allowed to retire early, at the age of 55, with full pension? In view of the Prime Minister's support for early retirement, will the Government carry out negotiations with a view to working out an early retirement scheme for miners?

Mr. Eadie: I said in answer to the hon. Member for New Forest (Mr. McNair-Wilson) that discussions are


always taking place on these matters at miners' annual conferences. It is no secret that for many years it has been the policy of the National Union of Mineworkers that there should be early retirement for miner-workers. When we debated this matter in Standing Committee, I said that we must be perfectly clear about what we mean by early retirement. I hope that we mean proper pension provision and that we are not talking about early unemployment for miners.

Radioactive Waste (Storage)

Mr. Patrick McNair-Wilson: asked the Secretary of State for Energy if he is satisfied with the facilities for storing radioactive nuclear waste at power stations.

The Secretary of State for Energy (Mr. Anthony Wedgwood Benn): The facilities for the storage of radioactive waste at nuclear power stations are formally approved by the Health and Safety Executive in accordance with the conditions attached to each nuclear site licence granted by the Executive under the Nuclear Installations Act 1965. These conditions are enforced by the Nuclear Installations Inspectorate. I am satisfied with these arrangements.

Mr. McNair-Wilson: Does the Secretary of State agree that, although reprocessing is becoming a bigger and more profitable business, the fact is that Wind-scale is full up? Is he aware that waste fuel rods are now being stored at above the desirable level at Bradwell and elsewhere? Is it right that we should take on the additional importation of waste for reprocessing, in view of the present situation?

Mr. Benn: I think that the hon. Gentleman is accidentally slightly misreporting what is happening. It is the used fuel elements which are being used and stored at Bradwell. There has been some holdup at Windscale, but within the next eight weeks a 500-tonne extension to the ponds at Windscale will be available. The reprocessing work that is now being discussed with the Japanese and others will not begin until 1987. As the House will know, we were discussing the provision of capital for the plant and the contract itself. We do not import waste; we import the used elements, which are then reprocessed.

Dr. John A. Cunningham: Is my right hon. Friend aware that the House, and those outside it, will be grateful to him for the way in which he has so clearly pointed out that nuclear waste is not stored at power stations? It is the irradiated fuel elements which are stored at power stations, and no reprocessing of those takes place other than at Wind-scale. Is my right hon. Friend clear in his mind—and if so, will he assure the House—that the facilities that we have, and are about to extend, are adequate to cope with the coming expansion of the use of nuclear fuel in power stations?

Mr. Benn: I am grateful to my hon. Friend for helping to clarify the situation. It is one that causes concern to the public. They often find it confusing and somewhat alarming, because they have been led to believe that we import nuclear waste and keep it, whereas we import fuel elements and reprocess them. Under the new contract we shall be in a position to send back the nuclear waste in a vitrified form.
I am aware of the problems of capital investment for nuclear reprocessing. BNFL has come forward recently with substantial expansion plans, including plans for overseas contracts, to which I am giving urgent attention.

Mr. Skeet: Will the right hon. Gentleman say why we are sharing the Japanese contract with the French when, if there had not been delay, we would have had the whole contract?

Mr. Benn: The hon. Gentleman, who is usually very precise, is on this occasion somewhat inaccurate. There is an arrangement between the French and the British for reprocessing work. I have had no part in the management decisions of BNFL. There is a rapid expansion of this business, and I believe it right that we should get our part of it.

Electricity (Heat-and-Power Schemes)

Dr. Edmund Marshall: asked the Secretary of State for Energy whether he will take the necessary steps to enable the Central Electricity Generating Board to initiate heat-and-power schemes.

Mr. Eadie: Under Section 50 of the Electricity Act 1947, the CEGB has


power to provide heat obtained in connection with the generation of electricity to buildings in neighbouring localities, or for any other useful purpose. The section also provides for the Board to obtain certain additional powers which it may need. I am also considering the recommendations of the Plowden Committee on this point as on others.

Dr. Marshall: Does my hon. Friend accept mat this very practical recommendation of the Plowden Committee should be considered independently of the main proposal of the Committee's Report, so that the matter can be finalised as speedily as possible?

Mr. Eadie: I would not disagree with my hon. Friend. The matter is receiving active consideration.

Mr. Rost: Is the hon. Gentleman not aware that the CEGB is at the bottom of the European league in terms of overall thermal efficiency in power stations, as well as in terms of the amount of electricity produced in combined heat-and-power production? Does the hon. Gentleman not recognise that because of this our electricity prices are rising much faster than those of our European competitors?

Mr. Eadie: I do not think that I can agree with the hon. Gentleman in his assumption or his assertion. I have answered the hon. Gentleman on this matter before. He will be aware that there is a study group, under the chairmanship of the Chief Scientist. That group is currently considering combined heat-and-power production. It expects to report later this year. As a result of errors committed by previous Governments, including the previous Conservative Government, in estimating the availability of cheap energy, we have not always pursued the right policies. The assumptions and assertions that the hon. Gentleman is making are not quite accurate.

Gas and Electricity Prices

Mr. Peter Morrison: asked the Secretary of State for Energy what is the percentage increase in the cost of electricity since 28th February 1974.

Mr. Eadie: I am informed by the Electricity Council that it is about 86 per cent. overall in England and Wales.

Mr. Morrison: Is the hon. Gentleman aware that that is a horrifying figure? Perhaps he will explain why the prices of the goods and services supplied by nationalised industries seem to rise much faster than the prices of those supplied by the private sector.

Mr. Eadie: I am surprised by the way in which the hon. Gentleman phrased the Question. I shall try to improve his memory. It was his then right hon. Friend the Chancellor of the Exchequer who, in May 1973, said mat the whole question required urgent reconsideration and that action had to be taken. The implication of the hon. Gentleman's Question is that the Government have given it urgent consideration and are acting on it. The fact is that the Yom Kippur war took place in 1973. The whole of the Western world has had to face many economic troubles arising from that war. The price of oil increased fivefold. The hon. Gentleman will have to concede that that is a factor.

Mr. Mike Thomas: Does my hon. Friend agree that to allow electricity prices to rise at the present rate, when we know how crucial they are to the budgets of low-income families, is damaging to the Government's price restraint strategy.

Mr. Eadie: I could not agree more with my hon. Friend, but if the Conservative Government had taken action the problems that we are now having to tackle might not be with us. My hon. Friend will be aware that, having considered the matter from the point of view of the poor consumer, we believe that my right hon. Friend the Secretary of State for Social Services is best equipped to deal with this serious problem.

Mr. Bowden: Is the hon. Gentleman aware that millions of elderly people are frightened to turn on their electric tires because they dread the electricity bills that are on their way? Will he stress to his right hon. Friend the Secretary of State for Social Services that there should now be a substantial increase in heating allowances, so that they can pay their bills when they come in in May and June?

Mr. Eadie: No one in the House would disagree with what the hon. Gentleman is


saying. Electricity charges are a colossal burden and are causing great concern among pensioners. However, it was my right hon. Friend the Secretary of State for Social Services who took action and tried to alleviate the hardship. I am sure that my right hon. Friend will read what the hon. Gentleman has said about increased heating allowances.

Gas and Electricity (Consumer Subsidies)

Mr. Gow: asked the Secretary of State for Energy whether he will make a statement about the phasing-out of subsidies for consumers of gas and electricity.

Mr. John Smith: The gas industry expects to make a modest surplus for the financial year ending this month. The electricity boards expect to make losses totalling about £65 million, for which compensation for price restraint will be considered. I am not expecting losses for either industry for the financial year 1976–77.

Mr. Gow: Does the hon. Gentleman accept that from the Opposition side of the House there is support for him for the courageous policies that he is following? Does he accept that, where there is real hardship among consumers, that hardship is best alleviated by special assistance to the consumer in individual circumstances rather than by subsidising the prices of gas and electricity?

Mr. Smith: I hope that some of the hon. Gentleman's colleagues will read the opening part of his supplementary question.
The Government have made it clear that it would be difficult to follow a price subsidy policy at a time when the requirement is for energy conservation. However, action was taken regarding the disconnection of pensioners who were living on their own. A committee was set up under Lord Lovell-Davis to undertake an informal review of payment and collection arrangements. We were not sure that those arrangements were perfect.

Mr. Palmer: Does the Minister agree that the Conservative Government introduced the policy of subsidisation, and that until then the electricity supply industry had had a proper return on capital?

Mr. Smith: I am grateful to my hon. Friend for reminding the House that the Labour Government inherited a formidable problem, which was entirely the result of the then Conservative Government, no doubt with an election in mind.

Mr. Fletcher-Cooke: Will the Minister ensure that the gas industry is not penalised for its modest profit by the imposition of a selective tax upon it?

Mr. Smith: Any question of taxation would be a matter for my right hon. Friend the Chancellor of the Exchequer. No doubt the hon. and learned Gentleman is referring to comments recently made by heads of other nationalised industries. The Government have not reached any decision on this matter. This country is fortunate in having fairly low gas prices, flowing from decisions taken by previous Governments that the British Gas Corporation should have a monopoly position on offshore gas.

Dr. Bray: Will the Minister confirm that price increases for electricity in the South of Scotland Electricity Board are higher than those in the United Kingdom generally, but that increases that have taken place in England under the fuel price escalation clauses have not taken place in Scotland during the year?

Mr. Smith: As was made clear by the South of Scotland Electricity Board when the announcement was made—and I should make it clear that this is not part of my direct ministerial responsibility—there was no increase over the whole year. During that period in England and Wales I understand that three price increases were triggered off by those clauses. In Scotland there was no price increase at all in that period; in England and Wales there were several increases.

Mr. Biffen: Is the Minister aware that we fully realise that the return to economic pricing for the electricity industry necessitates the substantial price increases to which he has referred? Is he also aware that that fact will concentrate public attention on the question whether people are receiving value for money from the electricity services? In that context, will he take account of the desirability of instituting some kind of efficiency audit of generating activities of the CEGB, in the light of the table in


paragraph 417 of the Plowden Report, which shows that we are at the bottom of the table in terms of thermal efficiency?

Mr. Smith: It is difficult for me to give my reaction to that Report until the Government have fully considered the whole of it. Therefore, the hon. Gentleman's suggestion must be seen in that context. I shall bear in mind what he said.

British National Oil Corporation (Salaries)

Mr. Viggers: asked the Secretary of State for Energy if he is yet in a position to make a statement on the salary structure for BNOC executives.

Mr. John Smith: The salary structure for BNOC executives is a matter for the Corporation.

Mr. Viggers: Why is the Minister so coy on this subject? It is surely a matter of increasing public concern that the heads of nationalised industries do not appear to want to remain in their positions for very long. Does not the difficulty in recruiting people to BNOC make it necessary for a statement to be made on this subject?

Mr. Smith: The question of salary levels is important, but whether or not I were to make a statment in the House I do not think that it would assist in or detract from the process of obtaining appropriate executives for BNOC. What I have said is in line with what my right hon. Friend the Secretary of State for Industry said on the subject of the National Enterprise Board. This matter was examined by the Lord President on a previous occasion, and all parliamentary precedents are in favour of the statement I have made.

Mr. Dykes: Will the Minister confirm that the Government plan is for Lord Kearton to receive more than is paid to the Chairman of British Leyland? What is the Government's view on the BNOC's recent acquisition of a London branch office—not even a headquarters—at a rent per annum of £180,000, including a 2,000 sq ft luxury penthouse flat on the third floor?

Mr. Smith: I cannot confirm the hon. Gentleman's last remarks. The salary

of Lord Kearton has not yet been decided. It is a Government decision. The hon. Gentleman's last remark is typical of the sniping by Conservatives whenever the topic of a publicly-owned asset comes up. I wish those same hon. Members were as vigilant in applying their strictures to the private sector.

Mr. Cryer: Will the Minister explain why the salaries of the executives of BNOC are a matter for the Corporation, whereas the wages of ordinary trade unionists are a matter for the Government in consultation with the trade unions? Should not the Government consider bringing into this post somebody who has a Socialist commitment, rather than somebody who is bought in via market forces at a huge and lavish salary, quite out of tune with the ordinary people who create our wealth?

Mr. Smith: My hon. Friend obviously misunderstands the nature of our incomes policy. The Government do not fix the wages of anybody. The system operates by agreement between the trade union movement and the Government. As for BNOC employees, I have every confidence that Lord Kearton will carry out the responsibilities placed upon him by Parliament and the Government. I know that he is dedicated to the success of BNOC, as are the Government.

Coal Imports

Mr. Edwin Wainwright: asked the Secretary of State for Energy how many tons of anthracite, coking and other kinds of coal, respectively, have been imported into the United Kingdom over each of the past three years; and what is the value in each instance.

Mr. Benn: With permission, I will circulate the figures in the Official Report.

Mr. Wainwright: Will my right hon. Friend say how long these contracts have been in operation? Is it not incredible that, although we have coal stocks of 30 million tons, at the same time we allow imports of coal? What about the promise we made to the miners that we would use all the coal they produced? What about foreign markets? Are we not doing anything on that score? Is not the situation ludicrous—

Mr. Speaker: Order. The Minister already has more than enough to answer in the hon. Member's first four supplementary questions.

Mr. Wainwright: Please may I continue, Mr. Speaker, because I am coming to the important part of my supplementary question?

Mr. Speaker: May I urge hon. Members that if they have an important part of a supplementary question they should put it first.

Mr. Wainwright: Is it not ludicrous to encourage the coal miners to produce more coal when we do not use it but, instead, rely on coal imports?

Anthracite
Steam Coal
Coking Coal





Quantity 
Value 
Quantity 
Value 
Quantity 
Value 





(million tons)
(£ million)
(million tons)
(£ million)
(million tons)
(£ million)


1973
…
…
0·13
2·60
0·37
3·87
1·15
14·8


1974
…
…
0·07
2·06
2·56
38·10
0·86
22·02


1975
…
…
0·13
4·96
4·09
76·07
0·78
24·49

Central Electricity Generating Board (Chairman)

Dr. John A. Cunningham: asked the Secretary of State for Energy when he next plans to meet the Chairman of the Central Electricity Generating Board.

Mr. Eadie: My right hon. Friend met Mr. Hawkins last Friday on a visit to Aberthaw and Hinkley Point power stations, and he is frequently in touch with him.

Dr. Cunningham: I thank the Minister for that reply. Is the Secretary of State for Energy discussing with the Chairman of the CEGB the use of so-called benign sources of energy for electricity generation? In that connection, will he say what view the CEGB takes on the recent statement by the Energy Technology Support Unit on the contribution of benign sources to meet our power needs by the year 2000?

Mr. Eadie: My right hon. Friend is actively concerned and involved in these matters. The Energy Technology Support Unit has undertaken work on the use of benign sources at some CEGB installations. The Board recently invited me to visit one of the installations to see its work. Although it is important that we have these sources, we should not exaggerate their likely impact on the economy.

Mr. Benn: I agree with most of the points made by my hon. Friend. Contracts were entered into some time ago, and the circumstances have changed. I have made it absolutely clear to the Central Electricity Generating Board that I hope to see imports greatly reduced. Discussions are taking place between the two Boards. The CEGB has undertaken not to engage in further imports without consultation with the National Coal Board. I have set up working parties to see whether we can achieve more conversions to coal and stimulate our coal trade exports.

Following are the figures:

We must realise that we are talking, I think, about only 8 per cent. of the total.

Mr. Conlan: When the Minister next meets the Chairman, will he impress upon him the fact that unless the CEGB ordering programme for new power stations is revised we shall have no boiler-making capacity left in this country after 1978? Is he aware that highly skilled teams are beginning to break up, that many of those teams are going abroad, and that in the 1980s the CEGB will have to depend on highly sophisticated equipment, with all the maintenance that that entails?

Mr. Eadie: My right hon. Friend has mentioned his concern from the Dispatch Box. We are well aware of this problem. Discussions have taken place with the industry to try to deal with the problem. One of the troubles has to do with the use of energy. Demand has contracted considerably. This is creating problems.

Mr. Rost: When the Secretary of State next meets the CEGB Chairman will he take the Under-Secretary with him so that the hon. Gentleman may get a firsthand briefing about the accuracy of the statistics that I quoted earlier, about the CEGB's being bottom of the European league for thermal efficiency, heat and


power production, so that the Under-Secretary will not give me inaccurate answers, conveying the impression that I was giving inaccurate statistics?

Mr. Eadie: If I misled the hon. Gentleman in any way, I apologise. I hope that he will accept that apology in the spirit in which it is given.

Mr. Palmer: Will my hon. Friend tell us whether, when his right hon. Friend was at Hinkley Point, he discussed with Mr. Arthur Hawkins the possibility of a Severn barrage, which would be a potentially benign source of power?

Mr. Eadie: Not that I am aware of. No doubt my right hon. Friend will write to my hon. Friend if he had such discussions.

Mr. Lawson: When the Secretary of State meets the Chairman of the CEGB may I ask him to make it clear—irrespective of any need for scraping together a few votes from hon. Members from coalmining constituencies—that he will not interfere with the CEGB's desire, on commercial criteria, to assist the electricity consumer by importing cheaper coal where this is shown to be possible?

Mr. Eadie: As far as I know my right hon. Friend does not have any miner constituents. I do not think that the hon. Gentleman's comments about "scraping" votes applies. I hope that the hon. Gentleman will reflect on the question that he has just posed. He is suggesting that we should risk contracting our indigenous coal industry to obtain coal from abroad which might not be there when we need it. That would not be an energy policy; it would be lunacy. We must have a large indigenous coal industry.

North Sea Oil (Government Participation)

Mr. Banks: asked the Secretary of State for Energy how many oil companies operating in the North Sea have stated publicly or in communications to his Department that they are not yet prepared to enter into discussions in detail with the Government on participation in the North Sea.

Mr. Benn: No companies have told me or my Department that they will refuse

to discuss participation with the Government.

Mr. Banks: Is it not the case that Government meddling in North Sea oil has delayed progress and investment, exhausted the confidence and enthusiasm of the companies, and cost the taxpayers a great deal of money?

Mr. Benn: No. The hon. Gentleman is wrong on all counts. The rate of investment last year was higher than the year before and will be higher again this year. The participation talks are in progress. If BNOC were to take advantage of the options open to it, including the option for royalty oil, it would have available to it in the 1980s between 15 million and 20 million tons of oil. The plain truth is that after a year of wringing their hands the Opposition are seeing every forecast they have made turn out to be totally false.

Mr. Skinner: Is it not a fact that one of the leading spokesmen connected with the Esso oil company has publicly intimated that he will not voluntarily participate in any agreement with the Government? Will my right hon. Friend assure the House that the Gulf-Conoco deal—which gives a State option only to buy 51 per cent. of the oil and does not give 51 per cent. of the power—will not be a pattern that will be carried through in any further negotiations in which my right hon. Friend may be involved?

Mr. Benn: I read the report in the Financial Times on the day I had lunch with the President of Exxon when he was in this country. No such reference was made to me. The House should not mistake a negotiating position for the true position. My hon. Friend has referred to the Gulf-Conoco type of deal, in which the Coal Board is already a one-third participant to equity and investment with the other partners. If we take the examples of Burmah, the acquisition of Ninian and the control of Thistle, that is an acquisition of equity. With Tricentrol it is an arrangement of a different kind. The House will recognise that in advancing our policy of getting control of 51 per cent. of these resources the Government should be free to adopt whatever system seems most appropriate in individual cases.

Mr. Alexander Fletcher: Will the right hon. Gentleman confirm that companies that have made major and effective contributions to the development of the North Sea oil resources but are not prepared to enter into voluntary negotiations will not be discriminated against in the next licensing round?

Mr. Bean: There never has been any discrimination in terms of nationality, nor will there be in the next round of licences. I must make some things clear. First, the Government are determined that their policy will succeed. There is no doubt about our determination, which is fully understood by the companies concerned. Secondly, from the outset it was made clear that participation would not be designed to alter the financial advantages of the companies. That is being dealt with by the petroleum revenue tax. Thirdly, many American companies prefer the British system of participation either to confiscation, as in the case of some countries, or the threat of divestiture, as in the United States.

Mr. Biffen: Does the right hon. Gentleman recollect that, when he addressed the Overseas Writers Club in Washington in February, he said that he recognised the legitimate interests of the oil companies and understood their anxieties? May we assume that the participation deals with Gulf, Continental and Tricentrol, which do not add at all to State equity, are attempts to assuage those anxieties?

Mr. Benn: The hon. Gentleman should not overlook the fact that we inherited from a Government of which he was not a member an arrangement with North Sea oil which betrayed our national interest. We have sought to remedy that with licences that were already contracted with certain companies. In dealing with licences entered into by the previous Government we have sought to make arrangements that will safeguard our interests. That is fully understood by the oil companies. We need the investment and technology to develop the North Sea. We have no intention whatever of falling back on the policies that the Conservative Party tried and which did this country so much harm.

Oral Answers to Questions — OVERSEAS DEVELOPMENT

Investment

Mr. Brocklebank-Fowler: asked the Minister for Overseas Development what further consideration he has given to the rôle of ODM in stimulating private investment in developing countries; and if he will make a statement.

The Minister for Overseas Development (Mr. Reg Prentice): I have decided to revive the Pre-Investment Studies Scheme, whereby aid funds may be used to underwrite up to one-half of the cost of pre-investment studies, subject to a maximum of £50,000, in respect of development to which the host Government attach priority.

Mr. Brocklebank-Fowler: I thank the right hon. Gentleman for that reply. Will he reconsider publishing a Green or White Paper to replace the policy as set out in the White Paper of 1971, which was ditched by his predecessor? Is he satisfied with the liaison between his Department, the Foreign Office and the Department of Trade in matters concerning private investment in developing countries?

Mr. Prentice: Many aspects of the White Paper to which the hon. Gentleman referred were maintained by my predecessor and have been in continuous operation. There has not been a great demand from the private sector for them. The scheme that I have mentioned was suspended by my predecessor, and I have decided to reinstate it. I do not think it is on a large enough scale to merit a White Paper on its own. I hope that private investors will take advantage of it as soon as it is offered.

Sir Bernard Braine: Is the right hon. Gentleman aware that the decision that he has announced will give great satisfaction to British industry and will help to harness British industry to the essential task of development which private enterprise can fulfil?

Mr. Prentice: I am grateful to the hon. Gentleman. I share his view that private investment has an important part to play in developing poorer parts of the world. I know that the hon. Gentleman would agree that this is no substitute for


official aid to the developing world. More of both types of aid is needed.

Mr. Grylls: May I ask the right hon. Gentleman what he is doing—in addition to the initiative that he has just announced—with his EEC colleagues to encourage industrial investment in the developing world by Western European countries? Is he prepared to consider taking an initiative in Europe, to help?

Mr. Prentice: I have considered that. In general, private investors make their own decisions in the expectation of profit. This is a decision for them. Private investment is a useful part of the flow of resources. What the Government can do in these matters is marginal. I hope that what I have announced will be of such assistance.

Common Agricultural Policy

Mr. Hooley: asked the Minister for Overseas Development what discussions he has had concerning the impact of the EEC common agricultural policy on imports from the 46 ACP countries which are signatories of the Lomé Convention.

The Parliamentary Secretary to the Ministry of Overseas Development (Mr. John Grant): The Convention guarantees the ACP countries almost completely free entry into the Community for their agricultural exports. My right hon. Friends the Secretary of State for Foreign and Commonwealth Affairs, the Minister of Agriculture, Fisheries and Food, and the Minister for Overseas Development have kept its operations under review, and this has already resulted in significant improvements in the operation of the trade regime which was agreed at Lomé.

Mr. Hooley: The theory of the Lomé Convention may be satisfactory, but what is happening in practice about imports of sugar and beef from developing countries? What is the attitude of the Community to the world reserves of grain, and the International Agricultural Development Fund?

Mr. Grant: There were difficulties about beef. We tried to resolve them and to achieve special arrangements. Botswana, in particular, now benefits from a 90 per cent. reduction in the third country levy. I cannot today answer my hon. Friend's question about sugar. He will

have to table a Question to the Minister of Agriculture, Fisheries and Food on that matter. However, he knows that the Convention guarantees access to the Community for 1·3 million tons of ACP sugar without payment of levy, and there is an arrangement for an annual negotiation on price.
I cannot give my hon. Friend an answer to his question on grain. However, in June there will be a meeting of the World Food Council and I have no doubt that this matter will be fully discussed there.

Mr. Jessel: Does the Lomé Convention give an unfair advantage to African countries as against other Commonwealth developing countries, such as India, in trading with the EEC?

Mr. Grant: We have made it clear that we are concerned about the Commonwealth Asian countries and the fact that some of the more populous Asian countries are excluded from the Lomé Convention. I know that when he meets the Development Ministers at a meeting scheduled for early next month my right hon. Friend will again be pressing particularly hard for the Community to implement what it accepted in principle, namely, a world-wide Community aid policy, which may particularly benefit the Commonwealth Asian countries.

Departmental Policies (Expenditure)

Mr. Canavan: asked the Minister for Overseas Development what changes, if any, he proposes to make in the policies of his Department, in the light of the cuts in public expenditure announced in the recent White Paper.

Mr. Prentice: The policies of my Department remain as explained in last year's White Paper, "The Changing Emphasis in British Aid Policies" (Cmnd 6270). The recent reductions in public expenditure as previously forecast do not affect the aid programme.

Mr. Canavan: In view of the miserable proposal in the White Paper that there should be an immediate decrease in our aid programme for next year, followed by an increase of only 16 per cent. by 1980, and as the White Paper was rejected by Parliament, will my right hon. Friend tell the Chancellor of the Exchequer that we have not a chance of meeting our commitment of 0·7 per cent. GNP


aid to the Third World unless the Treasury makes a more generous allocation of funds?

Mr. Prentice: My hon. Friend's reference to a reduction in 1975–76 arises from the fact that there was an underspending in 1974–75 which distorted the figure carried forward to 1975–76. But there will be an increase of 16·9 per cent. in real terms from next year over the following three years. I wish that we were doing more, but this is a civilised decision in relation to the fact that virtually every other public expenditure programme has been reduced for the years in question.

Mr. Cormack: Will the right hon. Gentleman reconsider whether we should give aid to Mozambique until that country's ambiguous position regarding Rhodesia has been clarified?

Mr. Prentice: No, Sir. The Government's policy of aid for Mozambique has been endorsed unanimously throughout the Commonwealth and was endorsed unanimously in the Security Council a few days ago, when a world-wide appeal for aid to Mozambique was made. The reasons for that are well known to the House. I wish that hon. Members opposite would give this policy the support it deserves on its merits.

Mr. Spearing: Bearing in mind my right hon. Friend's wish to spend more, does he agree that one of the most effective forms of aid is aid from this country which is backed by local contributions and local costs, particularly in the form of self-help schemes? Will he look at this matter in even greater detail than he promised in his last White Paper?

Mr. Prentice: The policy in the last White Paper involved a more flexible approach to the question of local costs. The new arrangements for matching some of the efforts of the voluntary organisations will give a new dimension. In other words, we are moving along the right road, although not perhaps as quickly as my hon. Friend would like. There is the problem of the balance of payments restrictions. I hope that we shall do better still in future years.

Mr. Frank Allaun: Does my right hon. Friend not think it immoral for us to encourage, as we are doing, the hungry nations to spend their limited resources

on sophisticated submarines, aircraft and tanks when what they really need and what they could buy from us is well-drilling machinery and teaching and medical equipment?

Mr. Prentice: Those are the very projects that are being encouraged through the aid programme. As for disarmament, I do not think that it would be fair for me to comment on particular countries—it would in any case take too long—but the Government are in favour of multilateral disarmament, so that the entire world wastes fewer of its resources on weapons of destruction.

Lesotho

Mr. Wall: asked the Minister for Overseas Development what assistance he is making available to the Government of Lesotho.

Mr. John Grant: A grant of £7 million for development assistance has been made available to the Lesotho Government for the three years ending this month. In addition, there has been a full programme of technical assistance. It is hoped to sign an agreement shortly on the level of development assistance for the next three years.

Mr. Wall: I welcome that reply. What help, both financial and in the provision of educational and administrative staff, is it possible to give to the national university in Lesotho?

Mr. Grant: Since the national university of Lesotho was established last October, we have continued the supplementation benefits to British staff at the university and we hope to conclude an agreement with the Lesotho Government fairly soon to continue that form of assistance. However, I understand that the Lesotho Government are curently preparing an overall plan of their own for the development of the university. We shall give sympathetic consideration to any approach for assistance with that plan, bearing in mind what other donors may be doing.

Mr. Pavitt: In considering the implementation of the next three-year plan, will my hon. Friend give special attention to the question of the development of self-help co-operatives, both agricultural and otherwise, in co-operation with the Co-operative movement in this country


in order to secure the maximum amount of mutual support?

Mr. Grant: We shall consider carefully what my hon. Friend said. We are aware of the need for further rural development in Lesotho. We are already doing a good deal in this respect, but we shall continue with it in our further assistance.

Mr. Rifkind: Is the hon. Gentleman aware that the Transkei, with economic problems similar to those of Lesotho, has expressed a wish to receive aid from Britain after independence, to reduce its economic dependence on South Africa? Would an application for aid be considered favourably?

Mr. Grant: It is not the policy of the Government at this time to assist the "home lands".

Africa

Mr. Peter Bottomley: asked the Minister for Overseas Development how many countries in Africa receive aid through his Department.

Mr. Prentice: Thirty-six countries receive aid directly. In addition, 12 regional organisations in Africa receive aid under the Ministry's programmes, and of course through these a number of countries receive aid from Britain indirectly.
I have arranged for a list of recipients to be published in the Official Report.

Mr. Bottomley: Is it the Government's intention to ignore development in such places as the Transkei? Will the right hon. Gentleman indicate what changes the Government would like to see made before they give aid to the Bantustans?

Mr. Prentice: The Government would like to see drastic and radical changes in the whole of South Africa. Aid to the Transkei is a very improbable development in the immediate future.

Mr. James Johnson: Is my right hon. Friend aware that those of us lucky enough to go to Africa occasionally and talk to Ministers, such as Mr. Kabaki, in Nairobi, in Ghana and Tanzania know that they feel that the Government are doing a first-class job, particularly in funnelling money to the poorest people in the poorest nations, which means that

it is going to the bush where it is badly needed?

Mr. Prentice: I am grateful for my hon. Friend's comment. He underlines the most important feature of the Government's aid strategy in Africa and elsewhere, which is to devote a larger and growing proportion of help to the poorest countries and to the poorest groups in those countries.

Mr. Jessel: How many of the 36 countries spend part of the aid that they receive on arms?

Mr. Prentice: In no case is the aid that we give available for spending on arms. I am speaking of development aid, which has nothing whatever to do with military activities.

Following is the information:

African Countries for which Provision has been made in my Ministry's Estimates for 1975–76:

Algeria

Benin

Botswana

Burundi, Republic of

Cameroon, United Republic of

Chad

Congo, Republic of (Brazzaville)

Egypt, Arab Republic of

Ethiopia

Gambia, The

Ghana

Ivory Coast

Kenya

Lesotho, Kingdom of

Liberia, Republic of

Malagasy, Republic of

Malawi, Republic of

Mali, Republic of

Mauritania, Islamic Republic of

Mauritius

Morocco, Kingdom of

Niger, Republic of

Nigeria, Federal Republic of

Rwanda Republic

Senegal, Republic of

Sierra Leone

Somali Democratic Republic of

Sudan, Democratic Republic of

Swaziland, Kingdom of

Tanzania, United Republic of

Togo, Republic of

Tunisia

Uganda, Republic of

Upper Volta

Zaire, Republic of

Zambia, Republic of

African Regional Organisations:

Lake Chad Basin Commission

East African Community

UBLS (University of Botswana, Lesotho and Swaziland)

WARD (West African Rice Development Association)

United Nations Economic Commission for Africa

African Development Bank

African Development Fund

Pan African Institute for Development

Desert Locust Control Organisation for East Africa

International Red Locust Control Organisation

Scientific and Technical Research Commission (Organisation of African Unity)

International Centre of Insect Physiology and Ecology

RHODESIA

The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan): I will, with your permission, Mr. Speaker, and that of the House, make a statement on the situation in Rhodesia.
The news that negotiations between Mr. Nkomo and Mr. Smith were broken off on Friday is a matter of deep concern. Yet another attempt to find a solution to Rhodesia's problem by peaceful means has been thrown away because of Mr. Smith's refusal to accept the principle of majority rule at an early date.
This effort has failed, like its predecessor that was launched by the four Presidents and Mr. Vorster in December 1974, because of Mr. Smith's prevarications. His purpose has not been to negotiate a constitutional settlement but to buy time in order to remove the pressures on him.
When Mr. Nkomo took his decision to begin fresh discussions with Mr. Smith, it was made clear that while Her Majesty's Government had no wish to take sides in the internal differences of the African National Council, we welcomed his initiative and wished it success. He and his colleagues have shown patience and determination in recent months and I believe that when the account of the negotiations is published it will be seen that the demands put forward by Mr. Nkomo were both reasonable and moderate.
It seemed likely in mid-February that the talks might founder and I then heard from a number of sources, as the House knows, that Mr. Smith wished Britain to become involved. I therefore asked Lord Greenhill to visit Salisbury to assess Mr. Smith's position in order that I might consider whether there was any real
prospect of Britain being able to promote a settlement.
Lord Greenhill's report did not give an indication that there was a sufficient change in Mr. Smith's attitude to make it useful for Britain to assume a rôle in those talks then going on.
More recently, he sent word to me that he would like the British Government to appoint a Commission of wise men to put forward the terms of a settlement. In the absence of any commitment by him to majority rule, this seemed to me to be retreading old ground and I made clear to Mr. Smith that I rejected the proposal.
Last week, Mr. Smith made a fresh proposal to the hon. Member for Bury St. Edmunds (Mr. Griffiths) which incorporated the original idea of the three wise men but proposed that they should take part in a round table conference to be attended by representatives of the Rhodesian Front, other representatives of the European Community, of Mr. Nkomo's ANC and selected leaders of the external wing of the ANC. The hon. Member was good enough to communicate this proposal to my right hon. Friend the Minister of State as soon as he returned, but by then the talks were on the point of breaking down. In my view, they were designed to do no more than buy even more time for Mr. Smith's régime. He does not seem to realise that he no longer has much time to buy.
During recent months, I have been giving a great deal of thought to the ways in which Britain could help to secure an orderly transfer of power in Rhodesia. During this period I have kept in touch with the African nationalist leaders and also with the four Presidents, whose advice I greatly value. It is my understanding that the four Presidents, despite their belief that the armed struggle may now be inevitable, still sincerely wish to see a peaceful settlement in Rhodesia.
If their hopes and wishes and ours are to be fulfilled, there must be a two-stage operation. First, there must be prior agreement by all the principal parties to a number of pre-conditions. These are as follows: first, acceptance of the principle of majority rule; secondly, elections for majority rule to take place in 18 months to two years; thirdly, agreement that there will be no independence before


majority rule; fourthly, the negotiations must not be long drawn out. There would also need to be assurances that the transition to majority rule and to an independent Rhodesia would not be thwarted and would be orderly. If these pre-conditions were accepted, it would then become possible for the second stage to begin, namely, the negotiation of the actual terms of a constitution for independence.
We should also need to ensure that the settlement provided a background in which both communities could live and work together in an independent Rhodesia. Many African leaders have reiterated their strong desire that those Europeans who are prepared to put their faith in Rhodesia should remain in that country and that their presence will help to ensure the country's development. Her Majesty's Government would be willing to consider financial and other means to assist this end.
Given the acceptance of the principle of early majority rule, it is in my view possible to reach a settlement which would go a very long way towards reconciling African aspirations and European fears. Britain would be prepared to play a constructive part in any negotiations in which these pre-conditions have been accepted and would be willing to sit down with representatives of all shades of Rhodesian opinion, inside and out.
An independent Rhodesia will need development assistance and aid for educational and other purposes on a significant scale. Britain would play her part, but I hope that members of the Commonwealth, the European Communities and others would also be willing to help.
In a final settlement achieved along these lines, all should be ready to agree that guerrilla activity should cease and that an approach should be made to the United Nations with a view to lifting the economic sanctions now in force. I am ready to discuss this approach if it meets with any reaction with all concerned, but no agreement would be worth anything until the principle of majority rule opens the door to new negotiations.
As things are, Mr. Smith is leading his country on the path of death and destruction. Even at this late stage, I ask

the European population of Rhodesia to believe that there is an alternative path. It is still just possible for Mr. Smith to follow it. If not, I hope that other leaders will emerge who recognise the realities of the hour and that the time is here when the legitimate aspirations of the African people can be met and reconciled with the desires of the European population. Only in this way can there be hope for a peaceful future for Rhodesia.

Mr. Maudling: May I thank the right hon. Gentleman for his statement and ask whether he is aware that we on this side of the House are glad that he has departed from the original purely negative reaction of the Foreign Office to the breakdown of the talks? Is he aware that we are also glad that he stressed what Britain could do for Rhodesia once there is a settlement? This is very important. May I express the hope that even now, while we do not necessarily agree with the details of the statement, Mr. Smith will accept the principle of transition to majority rule on timing and conditions to be agreed? Can the Foreign Secretary confirm that the ending of UDI would mean that this country would automatically resume de facto responsibility for the constitution and security of Rhodesia which we still possess de jure?

Mr. Callaghan: The right hon. Gentleman is aware from my consultations with him that I have been thinking very carefully about the kind of proposals I have put forward today and that the only question has been one of time—when it was appropriate to put them forward. I would have been caught in a trap if I had tried to insert them at the end of the discussions between Mr. Nkomo and Mr. Smith. I did not consider that they were on a basis that would have provided for this. We now have to appeal to a wider constituency which includes forces outside Rhodesia—forces for which some hon. Members may not much care—for example, the guerrilla forces. We may have to discuss the situation with a great many elements if we are to get a final settlement.
I thought it right to put forward these proposals publicly now to give Europeans as well as Africans in Rhodesia at least the opportunity of seeing that


there is a way forward in which we are ready to play our part, in conjunction with the Commonwealth, to safeguard both races and their future.
Frankly, it is not sufficient to hold out the hope to Mr. Smith that if only he will end UDI we shall de facto resume our responsibilities. That is the de jure situation now, but we must deal with the situation as it exists and the alternatives for Mr. Smith are for him to say that there will be early majority rule and to get on with it or to let others who will do so get on with it.

Mr. David Steel: Is the right hon. Gentleman aware that we welcome the cold realism of his statement? Does he agree that there are many examples in Africa where the transition to African rule has been sudden, unprepared and accompanied by much violence and human suffering, and that there are also examples where the transition has been peaceful and orderly and where the European minorities enjoy a fruitful life, as could happen in Rhodesia? What hopes has the right hon. Gentleman of persuading Mr. Smith that unless he opts for the second course the consequence will be chaos and revolution in his country?

Mr. Callaghan: I agree with the hon. Gentleman. I do not know that I have much hope of persuading Mr. Smith, whose contradictory statements, even in the past three or four days, give little room for belief that it is possible to negotiate with him. I am not hopeful. It is the duty of the House to say to the European population in Rhodesia—which is our responsibility and not Mr. Smith's—as well as the African population "Here is a way forward. We shall play our part if you will take the step that you Europeans believe to be risky."
There are examples, as the hon. Gentleman says—Kenya is one and perhaps the most notable—where there has been peaceful and orderly transition. I should like the House to know that, in my view, if the Europeans in Rhodesia are wise enough to negotiate with leaders representing various factions in Rhodesia, such a transition could take place even in that country.

Mr. Newens: Will my right hon. Friend make clear that we shall have

no truck with anything apart from full majority rule and that Britain will not allow herself to be used as an agent of procrastination?

Mr. Callaghan: Yes, Sir. Time is on no one's side in this matter, and I certainly do not wish to procrastinate. That is one reason—not the only one—why I have thought it right to put on the table today positive and constructive proposals which the four Presidents, the Europeans and the Africans in Rhodesia can reflect on to see whether they come anywhere near to being an agenda which they would be willing to discuss once the pre-conditions have been accepted.

Mr. Maurice Macmillan: The right hon. Gentleman referred to the European population as our responsibility and not Mr. Smith's. Are we proposing to set up regular communications by which the European population can get in touch with the Foreign Secretary?
Does the right hon. Gentleman accept that a settlement in Rhodesia is an important part, but only a part, of a more general conflict which is in danger of taking place in Southern Africa? What discussions, if any, has the right hon. Gentleman had with the four Presidents about economic and military aid to their countries to protect them from further Cuban expansion from Angola?

Mr. Callaghan: There are means by which the European population can get in touch with me, and, indeed, I have received emissaries within recent weeks who have expressed to me varying points of view. They know that they are free to communicate if they wish to do so. As to what the right hon. Gentleman called the general conflict in Southern Africa, I hope, as a result of action last week, that some part of that conflict has been removed. The Soviet Union played a helpful part in relation to its contacts with Angola and ours with South Africa. I hope that that action will bear fruit, although we shall not know until the end of the week. The Government have recently announced additional aid to Zambia in her present circumstances, to Zaire and Mozambique.

Mr. Whitehead: My right hon. Friend has correctly said that these important proposals should be put to a wider constituency. As Mr. Smith has proved to


be a pathological liar with whom it is impossible to negotiate, does my right hon. Friend accept that the minority community of Rhodesia should be contacted directly by Her Majesty's Government? How are we to sample opinion among the white population in Rhodesia?

Mr. Callaghan: That is a difficult question to which I cannot give a clear answer this afternoon. I hope that my statement will receive widespread publicity on the BBC external services and in other ways and will be made available to the Europeans in Rhodesia as well as the Africans. I have no other suggestions to make at present.

Sir David Ronton: Whatever Mr. Ian Smith may have said or done, does the right hon. Gentleman accept that the African majority in Rhodesia has a great deal to gain in the years to come from partnership with the European minority? The right hon. Gentleman speaks of constitutional proposals for majority rule, but what will he do to ensure that a genuine partnership of that kind remains in the interest of Rhodesia?

Mr. Callaghan: I agree that there is a lot to be gained from partnership with the European minority, but it takes two to make a partnership. At the moment we need a clear indication that the European minority is ready to share that partnership with the African majority. That is the first thing that is needed. If the pre-conditions can be accepted by those concerned, what happens in the future will be a matter for negotiation on an independence constitution. That is where the question asked by the right hon. and learned Gentleman will have to be answered. It is not for Britain to do so. We are not in a position to impose a settlement, but we have a de jure and moral responsibility which I am trying to discharge by putting forward constructive proposals for others to consider, those who have perhaps more power in the area than we have. It is for them to say whether they regard the proposals as being a starting point for a fresh beginning in Rhodesia.

Mrs. Hart: I very much appreciate the whole of the Foreign Secretary's statement, but I should like to put to him one point of anxiety on which I hope

he will be able to reassure the House. There is a danger that the British Government might at some point agree to go into Rhodesia to monitor a settlement along the lines of the proposals put forward. There is anxiety that, unless these proposals were totally acceptable to the Rhodesia Africans, after 11 years of UDI we should be putting ourselves again into a dangerous position. Will my right hon. Friend assure the House that there will be no question of the British Government's providing any presence in Rhodesia to monitor proposals before they have been totally agreed by the African majority in Rhodesia?

Mr. Callaghan: I am grateful to my right hon. Friend. I am aware of the point she raises, and I have been troubled by the deep suspicion that exists of the way in which the United Kingdom is trying to handle these matters. When my right hon. Friend has had time to study the statement, I hope that she will feel able to tell her friends in Africa that there is no need for the concern she expressed. We have no intention of going to Rhodesia to pull anybody's chestnuts out of the fire and we shall not be monitoring proposals. If there is an agreement which is acceptable to all the shades of opinion in Rhodesia which I outlined, we shall be ready, if necessary at some sacrifice to ourselves, to assist in ensuring that that settlement is translated into reality for all the people of that country.

Mr. Hastings: I welcome the policy suggestions made by the right hon. Gentleman, particularly the concept of the wider constituency. Does the right hon. Gentleman agree that the key may be that so long as the main fear in the minds of the white Rhodesians is of Communist, Russian and Cuban aggression rather than any other constitutional consideration, unless he can produce some guarantee of integrity after settlement there is a fairly slim chance? Would the Foreign Secretary say something more about that?

Mr. Callaghan: My right hon. Friend the Prime Minister has made clear in several quarters that any aggression by external forces against Rhodesia would meet with the condemnation of this country. I use that word advisedly.

Mr. Hastings: That is no guarantee.

Mr. Callaghan: I have indicated how far we can go. If the hon. Gentleman would like to volunteer, he can give me his name afterwards.

The Parliamentary Secretary to the Treasury (Mr. Robert Mellish): I will give the hon. Gentleman a pair.

Mr. Callaghan: My own view is that if we could reach agreement along these lines the integrity of the country would be respected. I shall take every opportunity—and some opportunities are open to me in the very near future—to make clear that the situation in Southern Africa can only be made worse unless the people of Rhodesia are allowed to settle their own problems.

Mr. Faulds: Will my right hon. Friend accept that there is general support and agreement on these Benches for his politically realistic statement that the guerrilla representatives must be included in any negotiations? But will he ponder the possibility that two years is too long a period before the evolution of Zimbabwe, because in that period the situation can only massively deteriorate?

Mr. Callaghan: Yes, Sir. I said a period of 18 months to two years, but it is clearly not one to which I would tie myself. But we have to have a period of orderly transition if it is to come at all. It must be a period in which African Ministers are brought into government, in which electoral rules are prepared, and in which elections can take place. Therefore, I think that what I have suggested would not be an unreasonable period, and I believe that it could well be acceptable to the African majority there—I will not speak for anyone outside—if they thought that there was a reality in what was intended, if they believed that it would really come about and not be thwarted. This is where Britain could play her part.

Mr. Eldon Griffiths: Is not the heart of the matter the question of safeguards—safeguards for the Africans that progress towards majority rule will be real and come quickly and safeguards for the white minority that they will be able to share in power and will have some safeguard for their property and their pensions? May I join the right hon. Gentleman in the hope that all those in Rhodesia and in the adjoining countries

will seize with both hands the constructive offer that he has made today? May I wish him god-speed in achieving it?

Mr. Callaghan: I am deeply obliged to the hon. Gentleman for what he has said, for he has the most recent experience of any of us in Rhodesia. What he has to say will reinforce, I hope, the practical approach that I am trying to make. I hope that his words will be listened to in Rhodesia. I entirely agree with him about the need to satisfy both Europeans and Africans. That will be a matter for negotiation when the pre-conditions have been accepted, and it would be my strong desire and intention to see that both were safeguarded in any constitutional independence agreement that was arrived at.

Mr. Luard: Are there not many signs that Mr. Smith and his colleagues still do not fully recognise the harsh reality of the situation with which they are faced? Whilst my right hon. Friend has today set out the picture of an alternative settlement which it might be possible to reach if they were so willing, is it not essential meanwhile to tighten sanctions against Rhodesia and to attempt to stop up the loopholes which still exist in them?

Mr. Callaghan: Yes, Sir. The Commonwealth Sanctions Committee has met and there will be a meeting of the Security Council very soon on this matter. I believe that they will take steps, and, of course, the EEC itself has the matter constantly under review with a view to tightening sanctions. We have had 12 years of sanctions. They have thwarted the development of Rhodesia but they have not provided a solution to the problem. I therefore want to press as much as I can the constructive part of my statement and appeal to the good sense of the European population, if it is possible, so that they can see that there is another path rather than the dead end they are now in.

Mr. Amery: Has the right hon. Gentleman seen the statement put out by Mr. Nkomo that both sides were agreed on the principle of majority rule and that the difference between them lay in the length of period of transition—according to Mr. Nkomo, 10 or 15 years on the one side and one or two years on the other? Would it not be wiser in these


circumstances for Her Majesty's Government to reserve their position on the exact time scale if they are to arbitrate successfully in a matter of such importance, the alternative to a solution being too ghastly to contemplate? Would not the Foreign Secretary also agree that, by insisting on no independence before majority rule, he is coming perilously close to asking for unconditional surrender by the Smith regime and that this is usually a bankrupt policy in all diplomacy?

Mr. Callaghan: Mr. Nkomo was asking for immediate majority rule. My hon. Friends have reminded us of the latest views of Mr. Smith. If only Mr. Smith would stick to one period for longer than a week, we would know where we were, but I have no means of knowing whether it is 1,000 years or 10 years. Therefore, we have to take into account that Mr. Nkomo is not the only one involved. The situation is moving fast, as I believe the House now knows, and there are others who, if they do not believe that a reasonable settlement can be reached, will take up arms. That is the reality of the situation.
The right hon. Member for Brighton, Pavilion (Mr. Amery) speaks of unconditional surrender by Mr. Smith. I do not know that I want Mr. Smith to surrender to Great Britain. I want him to surrender to the facts of the situation and then to lead the European people along a better path. That is his responsibility now, and I hope that the right hon. Gentleman will encourage him to take it.

Mr. Hooley: Does my right hon. Friend not agree that the major road block now is Ian Smith himself and that it will be as futile to talk to him in the future as it was in the past?

Mr. Callaghan: I made some general comments on that aspect at the end of my statement. It is possible for Mr. Smith to change his mind. It would not be for the first time, perhaps, but if he does not do so I hope that other European leaders will take the matter into their own hands and will, in whatever way they think appropriate, try to educate opinion in Rhodesia along these lines.

Mr. Cormack: Bearing in mind the necessity for his realistic initiative to be accepted in Rhodesia, will the Foreign Secretary consider either going there himself or sending a Minister of State to impress upon Mr. Smith the offer that has been made in the House today?

Mr. Callaghan: Yes, Sir, I would consider that. But I think that there must be some indication from Mr. Smith—and we have had this argument time and again. This is why I have held back. Mr. Nkomo has pressed it upon Mr. Smith; Mr. Vorster has pressed on him the need for a settlement; and the four Presidents have done so. Indeed, everyone has. It is now up to Mr. Smith to make his position clear if he is willing to accept preconditions. Either my right hon. Friend or I would be happy to go to Africa to explain what we have in mind. It is not my desire to impose what I have said on anyone. But we regard it as the basis for a settlement and one which everyone could take up and discuss.

Mr. James Johnson: Whilst I accept that my right hon. Friend appreciates the dynamism of the situation, is it not a fact that even now it may be too late? Is there not a danger that Mr. Nkomo may even now, in the historical context, be a black Kerensky? Is it not the view of the heads of neighbouring States that power lies in the hands of guerrilla forces and people outside Salisbury, who speak, and will speak in the future, for their people?

Mr. Callaghan: There is no doubt that the guerrilla forces outside Rhodesia are growing. But they are not the only forces. There are still considerable political African forces inside Rhodesia if Mr. Smith can only bring himself to treat with them on a realistic basis. We must involve all the forces in final talks, including the guerrilla forces. But I do not believe that they would necessarily be the determining factor if we could reach a settlement which would appeal to the great body of African people inside Rhodesia itself.

Mr. Blaker: When we are hoping that Mr. Smith, and many other white people in Rhodesia who think like him, will change the position they have taken for 11 years, some of us wonder whether it is helpful to describe him as a pathological liar. Does it advance the case?
While the constitutional responsibility for a settlement rests on this House, is the right hon. Gentleman aware that there are many who agree with him, in regard to guarantees for various parts of the population and aid to Rhodesia after a settlement, that it is right to think in terms of bringing in other countries to help? Is the right hon. Gentleman bringing other countries along with him in his thinking?

Mr. Callaghan: As to the first part of the question, everyone chooses his own language, and we all have our own opinions. I am bound to say that I do not feel that I can rely upon what Mr. Smith says to me. I wish I could. It would make negotiation much easier. One must speak from experience and speak frankly on these issues. This is one of the difficulties that everybody who has dealt with Mr. Smith has found. To use a mild word, his suppleness is such that one is never quite sure when one has grasped him and when he is out of one's reach again.
I have chosen my own word in my statement. I used the word "prevarication". I stand by that. I think no one can deny that that is the situation. I have not used the language to which the hon. Gentleman referred and do not intend to be offensive to anybody—not this week, anyway.
Concerning the second part of the hon. Gentleman's question, I have today been in touch with the Secretary-General of the Commonwealth, Mr. Shridath Ramphal. We hope through him to involve the rest of the Commonwealth in these matters, because it was at the Kingston meeting, the hon. Gentleman will recall, that a stand was taken on these matters.

Mr. Stonehouse: Has the Foreign Secretary at any stage conveyed a guarantee to Mr. Smith that he and his colleagues will in no circumstances be charged with high treason or other crimes against the Crown?

Mr. Callagahan: I have given no such guarantee, nor has one been asked for. I should have to think about it if it were. I am not sure what the reply would be.

Mr. Luce: I welcome the Secretary of State's constructive proposals. Will

he use every means at his disposal to bring home to the Europeans the stark choice they now face? Either they refuse to compromise, in which case it will lead to their own ruination and exploitation by the Soviet Union, or else they reach an early settlement, in which case they at least have a prospect of an orderly transition to independence and, indeed, a prospect of contributing to the future of Rhodesia.

Mr. Callaghan: I am grateful to the hon. Gentleman, and I hope that the several expressions of view from the Opposition Benches will convince Mr. Smith that in this approach there is a great deal of unity in the House of Commons. I am not saying that everybody agrees with it, but there is a great deal of unity in our assessment of the situation and our analysis of what needs to be done. I hope that hon. Gentlemen opposite will make this as clear as they can to Mr. Smith and to those in Rhodesia whom they may know or to whom they may even be related.

Mr. Pavitt: Will my right hon. Friend, in taking note from all parts of the House of the desire for a genuine cooperation between all colours, races and creeds in Rhodesia, nevertheless be vigilant that the kind of de jure co-operation which may emerge should not be the economic de facto co-operation of the kind between a small jockey and a very large horse?

Mr. Callaghan: Yes, Sir.

Mr. Walters: Bearing in mind the highly disturbing reports emerging from Mozambique, with all their very dangerous consequences, will the Foreign Secretary not consider it wise to achieve some reassurances before proceeding with the normal aid programme?

Mr. Callaghan: That is, I think, a separate question, but I am certain that if we can only proceed along these lines, then President Machel, who is one of the four Presidents concerned, will be very ready indeed to co-operate in trying to make a success of it.

Mr. Flannery: Will my right hon. Friend agree with me that people who talk about preventing mankind having democracy for 1,000 years have had infamous predecessors who were treated


somewhat roughly? Will my right hon. Friend promise me that when a word such as "partnership" is used in the context in which it was used earlier from the Opposition Benches it must in no way be accepted as precluding majority rule in terms of "one man, one vote"? That is the kind of partnership which would be induced by democracy.

Mr. Callaghan: Majority rule can, of course, mean a number of things, but it must lead in the end to "one man one vote". Whether it begins there is a matter for negotiation. It may be that it would or that it would not. But majority rule means what it says, namely, rule by the majority. We know what we mean by that, and I think everybody else knows what we mean by that. It is on that basis, unpleasant though it is for many people in Rhodesia, that the Europeans have to make up their minds.

Mr. Wall: Will the right hon. Gentleman agree that the key lies in the safeguards given to the white minority? Will he say what he has in mind in this respect? Above all, will he say whether such safeguards will be guaranteed by this country?

Mr. Callaghan: I do not think I wish to go further this afternoon than I have done in my statement. I considered it very carefully and, as the hon. Gentleman may guess, I had a number of thoughts in mind about what would need to be put forward. But I think that that comes at the second stage, when we have the pre-conditions accepted, under the general umbrella that we shall do our best to safeguard the future of all the races in Rhodesia. Then we can begin to discuss the details and what Britain would or would not agree to underwrite.

Mr. Ioan Evans: Will my right hon. Friend realise that the support he has had from all sides of the House will also be shown by nations throughout the world? It would be an impossible situation for us to be seen to be supporting the minority régime in Rhodesia. Will my right hon. Friend point out to the white population that they are facing now a choice of settling either for majority rule quickly or for a civil war and unnecessary bloodshed?

Mr. Callaghan: Yes, I fear that this is the choice that lies before them. That is why I hope there can be negotiation with responsible African leaders who represent their people and who, I believe, are anxious to avoid Rhodesia walking along the path that some other African States have walked when there has been a disorderly transfer of power.

Several hon. Members: Several hon. Members rose——

Mr. Speaker: I shall take three more questions. Mr. Christopher Brocklebank-Fowler.

Mr. Brocklebank-Fowler: If the Foreign Secretary does not spell out now in some detail the sort of safeguards he has in mind for the white minority in Rhodesia, is there not a danger that, in the absence of these safeguards, they will refuse to face the realities of the situation, continue to look inwards and become a small laager, totally without recognition of the realities of the present situation? If the Foreign Secretary puts forward proposals for safeguarding the white minority now, that could well encourage them to accept the principle of majority rule and progress could then be made towards a settlement.

Mr. Callaghan: It is my hope that the general statement of intention that I have made will make those who want to tread another path believe that it is worth while finding out more about it. I considered whether I should spell out a number of issues in the statement but came to the conclusion that it could not be a complete list of issues. There are many issues which might appeal to the hon. Gentleman, and issues which appeal to me. The British Government would have to take them all into account and negotiate on them in good faith. I repeat the general intention, which is that we should see to what extent European interests can be safeguarded and whether and to what extent they would need to be underwritten in more than one way in trying to make Rhodesia a country in which both communities can work together.

Mr. Robert Hughes: My right hon. Friend referred to the fears of the Europeans in Rhodesia and to the aspiration of the Africans towards "one man, one vote", majority rule and democracy,


which is a laudable object. Will he agree that in no circumstances should any impression be fostered that it is somehow a Communist conspiracy which is leading the Europeans along a road which can only bring disaster for them?

Mr. Callaghan: Yes, Sir. I hope that the European population in Rhodesia will have a full statement of what is being said. Sometimes I feel that they are rather cut off from opinions, not only in the rest of the world but even in the rest of Africa. This is a great misfortune, and anything that my hon. Friend or others can do to overcome it will be very helpful.

Mr. Aitken: Since Rhodesia's tragic progress down what the right hon. Gentlemon rightly called the path to death and destruction is being accelerated by the Soviet and Cuban military activities in the area, can the right hon. Gentleman give the House some indication of the sort of specific requests and proposals that he will be putting on this subject to Mr. Gromyko during the course of this week?

Mr. Callaghan: I do not think that that would be proper.

Several Hon. Members: Several Hon. Members rose——

Mr. Speaker: Order. We must move on.

STATUTORY INSTRUMENTS, &c.

Ordered,
That the Eggs Authority (Rates of Levy) Order 1976 (S.I., 1976, No. 366) be referred to a Standing Committee on Statutory Instruments, &c.[Mr. Edward Short.]

Orders of the Day — SUPPLY

[13TH ALLOTTED DAY]— considered

Orders of the Day — PERSONAL TAXATION

4.11 p.m.

Mr. John Pardoe: I beg to move,
That this House, believing that the impact of personal taxation is both arbitrary and too heavy, and that the machinery by which the House can influence this impact is wholly inadequate, calls for relief of this burden, for a Royal Commission on Taxation, and for procedural reforms to enable the House to maintain a continuing review of the combined effects on the ordinary taxpayer of Government income and expenditure.

Mr. Speaker: I wish to announce that I have selected the amendment in the name of the Government.

Mr. Pardoe: Your announcement comes as no surprise, Mr. Speaker.
I see that the Government Benches, apart from the Treasury Bench, are almost deserted. I hope that by the end of this debate we shall have been able to convince the Government that this is not an exercise in Labour Government-bashing but a very much more serious matter and that we are trying to say something constructive on the eve of the Budget.
A Liberal Supply Day is very rare and perhaps, therefore, it makes it more difficult for my right hon. and hon. Friends to choose the subject for such a debate. We have chosen to debate the subject of personal taxation for many reasons, partly because we have always regarded the reform of taxation as a very important matter and partly because there have been a number of reports and resolutions from Liberal conferences over the years on the subject. There was also our early advocacy of the tax credit system as a major instrument of reform.
I cannot believe that any right hon. or hon. Member is unaware of the very considerable feelings that taxation at its present levels raises in the constituencies. It is not just a question of complaints from the middle-income groups. They come from almost all our constituents.


My own experiences on two pre-legislative Select Committee on taxation—that on the tax credit scheme under the Conservative Government and that on the wealth tax more recently under the Labour Government—have taught me the need for reform and the perils of piecemeal ad hoc reforms.
There have also been a great many Parliamentary Questions on these subjects, a few of which I have asked myself and some of which have been asked by others of my right hon. and hon. Friends. However, I must pay tribute to the hon. Member for Norfolk, North (Mr. Howell), who has done more in this direction probably than any other hon. Member, and all of us are grateful to him for his work.
I mention publications, too, which have brought the attention of the Press, of the Government and, I hope, of civil servants to this very important matter. There are two publications by the hon. Member for Norfolk, North—the document which he has produced for the Low Pay Unit and that which he has produced for the Conservative Party itself. Also, there are other documents by the Child Poverty Action Group and one recently published by Aims for Enterprise written by the Liberal candidate for Lewisham, Michael Minter. This matter has also been raised in recent weeks by the Chairman of the Supplementary Benefits Commission, David Donnison. Although he was not talking specifically about taxation, it was clear from his article in Social Work Today and in his widely publicised lecture that it was the impact of taxation coupled with the benefits system which was causing many of the problems to which he drew attention. I hope, therefore, that we can have a relatively non-partisan debate on this matter.
We are concentrating on personal taxation not because we regard other taxation as unimportant but simply because this is a short debate and it seems better to concentrate on personal taxation rather than spread the butter too thin.
It is not my intention to blame one Government more than another for the present situation, although I am sure that some others will seek to do so.
I notice that there was a debate in the other place on 10th March on the disincentives of taxation, in the course of which Lord Orr-Ewing said that in six years of Labour Government from 1964 to 1970 taxes had been raised by no less than £3,000 million. He compared this with the record of the Conservatives and said:
Under Tony Barber (as he then was) taxes were cut, cut and cut again. They were cut not just to the extent of the £3,000 million which had been added, but by another £1,000 million, making £4,000 million in all.
What exactly does that mean? I think that we had better be careful of using the phrase "cutting taxation", which can mean all things to all men. If taxes were cut during that period of Conservative Government, I should have thought that the total of lax income at the end would have been less than it was at the beginning. But it was not. It was not less either in money terms, in real terms or as a proportion of national income.
I hope that even Conservative peers can read the very helpful document Economic Trends, produced by the Government Information Service. Table 111 is the relevant document. I know that it is always difficult to choose which years to compare because one is never sure whether an incoming Government have any effect on taxation in the year in which they come to power. But, comparing 1969 with 1973, we can see that total tax receipts increased from £14,749 million to £20,016 million, which was an increase of £5,267 million. Taxes on income alone increased by £2,775 million. So how is it possible to talk of tax cuts in that period?
In the same debate, Lord Barber himself made very much the same mistake when he said:
I had always cherished the hope that my successors at the Treasury would, over the years, be able to continue the reduction of personal direct taxation (income tax) until it approached that of our main overseas competitors."—[Official Report, House of Lords, 10th March 1976; Vol. 368, cc. 1281–1301.]
We could all say "Amen" to that if only the reduction of which he spoke had ever begun. The reduction never happened.
In answer to a Question of mine on 16th December last, the Treasury gave the proportions of income paid in income tax and national insurance contributions


in each year since 1945 by a single man and a married man with two children, both men on average earnings. In 1969–70 the married man with two children on average earnings paid 12·5 per cent. of his income in tax. In 1973–74 this had risen to 14·2 per cent.
I ask Conservative Members to plot the figures given in that answer or in any others given since. They will find that it is impossible to make the case that, in the matter of income tax over the long term, there is much to choose between one Government and another.
In his excellent pamphlet published by the Conservative Party, the hon. Member for Norfolk, North frequently makes the point that there is very little to choose between the tax policies of one or other Government in terms of their effect. The only way in which it can be claimed that in that crucial period—which Lord Barber claimed to be a period of tax cuts—when those cuts could have taken place is to compare what hapened with what would have happened if the tax-free allowances threshold had remained unchanged throughout the period. However, those allowances did not remain unchanged. They were changed to a lesser extent than they should have been to keep up with inflation, and they would have been changed whatever Government had been in power.
The hollowness of the claim to have cut taxes can best be seen from a study of the number of taxpayers. All Chancellors always claim to have removed a large number of people from the tax net. No doubt on 6th April we shall hear again the great claim by the Chancellor that he has removed X million people from the tax net. Over the past 10 years Chancellors have claimed to have taken 8 million people out of the tax net, yet there are now 2½ million more taxpayers than there were 10 years ago and the working population has not increased.
I emphasise this aspect of the Conservative Government's record not because I want to score points against them but because I am trying to look at the matter objectively and admit how difficult it is for a Government to reduce taxation in the present system even where they are inclined to do so. I accept that the Conservatives sound as though they want

to cut taxation while the Socialists sound as though they want to increase it. How politicians sound and how they turn out are two different things.
In so far as the Conservatives were able to slow the pace of the increase in personal taxation, they did so by allowing a greater gap between income and expenditure, and that was the borrowing requirement. Table 111 of Economic Trends shows that they rose very substantially in that period.
The first and major point of our motion is quite simply that personal taxation is too high. I am not singling out any one section of the population, because it is not my purpose to set one class of taxpayer against another. But the Answer on 16th December shows what has happened to the taxpayer on average earnings. Let us take tax and national insurance contributions together. Most of our constituents combine the two. We in Parliament distinguish between them, but there is little point in doing so.
The year 1975 set some kind of a record. In it the average British bachelor on average earnings for the first time paid one-third of his total income in tax and national insurance contributions. The average family man with two children, where he was on average earnings, paid one-quarter of his total income in tax and national insurance contributions. In 1975–76 the married man with two children and average earnings paid 19·9 per cent. in tax and 5·4 per cent. in national insurance contributions, a total of 25·3 per cent. Ten years ago he would have paid, if he had been on average earnings, 5·9 per cent. in tax and 5·3 per cent. in national insurance, making a total of 11·2 per cent. Twenty years ago he would have paid 0·4 per cent. in tax and 2·9 per cent. in national insurance, a 3·3 per cent. total. To anyone other than a dedicated Socialist who believes in collectivism for its own sake, those are appalling figures. They have developed under Governments of different political persuasions, but why?
Public expenditure is the main single reason. It would be foolish to suggest that taxation can be reduced without a reduction in public expenditure. I want to concentrate on some of the worst effects of the present level of taxation and see whether, even accepting the present


level of public expenditure—which I do not—we could not do something to make the system work better. First, there has been a major switch from taxes on expenditure to taxes on income. In 1973 taxes on income amounted to 47½ per cent. of taxes on income and expenditure combined. In the first three quarters of 1975, taxes on income amounted to 55 per cent. of combined taxes on income and expenditure. However, we have to beware because, although a reversal of that trend would go some way to help, it would not make a very significant impact and we would have to raise consumption taxes substantially to make the sort of impact we would like on income tax levels.
There is, secondly, the problem of the threshold. We have been told by successive Chancellors over the years that there is no need to tie the threshold, the different levels of rate bands and the other personal allowances to average earnings or to the cost of living—which would be indexation. We are told that it is not necessary because they are revised every year and are raised. The trouble is that they are not, and it is the failure to maintain thresholds at a constant proportion of average earnings that has been responsible for most of the anomalies which now face us. A little over 20 years ago, the married man on average industrial earnings with two children did not pay tax. In other words, the threshold was then the level of average industrial earnings. Ten years ago he paid tax if his income exceeded 72 per cent. of average earnings. This year he will pay tax if his earnings exceed 44 per cent. of average earnings.
The crazy thing about this level is that it is well below the so-called poverty line established by the Department of Health and Social Security. We therefore have the idiocy that half of Whitehall pays out because family income is too low while the other half presumes that these families are well enough off to pay tax. Couple the fact that the threshold is too low with the fact that no tax in payable on short-term benefits—particularly unemployment benefit—and the situation arises in which work is frankly not worth while for a large number of people.
I know that many members of the public rant and rage about the shirkers,

the skivers and the scroungers. Some of these examples were used by David Donnison in his recent article. Whenever I am confronted with my constituents' payslips—as I frequently am at my Saturday morning surgery—I am amazed not that people do not work but that they do work. I marvel that many of my constituents go to work. The majority of them would be far better off not doing so. I am certain that there is not one of them who would not be better off staying away from work for 14 weeks a year. Just a few of them do that, and they work it very well.
It is not good enough to rely on Governments to update allowances in line with the cost of living. They do not do it. The best method would be indexation, but not indexation at present levels. The relationship between the different allowances has been changed by inflation and arbitrary updating. The tax allowance for children has been doubled since the mid-1950s, although the cost of living has trebled. The only allowance which has kept pace with the cost of living is that for the single person.
We have devalued family tax allowances and benefits. We need to return to first principles before we start indexation and think through the basic reasons for family provision and the level at which it should be set. We should remember that when Beveridge recommended all the family provisions it was because of the principle of income maintenance, the idea that family poverty is not something that lasts throughout a family's lifetime but is something that exists at particular times, because expenditure rises while income does not or because income falls, during periods of sickness, when the wife cannot work because she is having the family and during periods of retirement and unemployment. That is the underlying reason for the income maintenance provisions and for family benefits. When we have established the proper level, we should index it.
The other effect of low thresholds is the poverty trap. A total of 50,000 families are caught in a situation in which, because of increased taxation and reduced benefits working together, they will take home less if they earn more. There are 390,000 low-income taxpayers who will receive only half of the extra £1 they earn, and 150,000 of them will lose between 75p and 99p of each extra £1.
Reducing the tax threshold, which I am sure the Chancellor is considering, would be expensive. To restore it to the position of two years ago would cost £2 billion out of the present £14 billion income from income tax. That is a measure of how far Parliament has been bypassed in voting income. We never voted that sum. Parliament never intended the Government to have that £2 billion. They obtained it because of inflation, because Parliament has not seen fit to tie their hands by indexation. To return the thresholds to the 1972–73 levels would cost more than £3 billion, and to increase the single and married persons' allowance by only 10 per cent. would cost £720 million for the current tax year, equivalent to 2p on all tax rates across the board.
Obviously, some will ask whether taxation is too high. I do not wish to go into international comparisons, because it is exceedingly difficult to compare one system with another. The Government's statistical services produced in Economic Trends last year a comparison which showed that up to 1972–73 we were not an over-taxed nation. I think that more recently increases in taxation here have been much more than elsewhere, and I suspect that such a comparison today would be rather different.
What about the effect on incentives? I shall not argue that. I read the Official Report of the debate in the other place, where there was a great deal of opinion but precious few facts, which are difficult to come by on this matter. I refer hon. Members to a chapter in "The Economics of Public Finance" by Professor Cedric Sandford, which is being published this month. It is the best summary I have seen of all the research done in this country and some of the research abroad on the question of taxation and incentives. After reading it, I do not know—and I do not think that anyone else does—whether tax is an incentive or disincentive. I assume in my own case that it is a disincentive, but I am not sure that that applies to everyone.
There is also the effect of high taxation on inflation. This is likely to be an extremely important engine behind demands for increased pay. I remember reading Roy Harrod's biography of Keynes. A description of Harrod's first interview with Keynes went as follows:

Keynes propounded the view that no nation will endure paying more than a given percentage of its national income in taxation, and if it has to carry a greater load it will almost automatically find escape from its plight by inflation".
We certainly have inflation, but I do not know whether it is because we have been escaping from our plight. However, I suspect that taxation has a substantial effect on demands for increased pay.
There is the effect of high taxation and the measures by which we vote taxes on the level of Government expenditure. That is a difficult chicken-and-egg argument. In the debate in the other place, the Lord Privy Seal said:
Taxation goes with public expenditure".—[Official Report, House of Lords, 10th March, 1976; Vol. 368, c. 1290.]
But does public expenditure go with taxation? If it did, we would manage to control both rather more effectively.
I suspect that the Lord Privy Seal has got it about right, and I am confirmed in that view by the evidence which Sir Alec Cairncross gave to the Expenditure Committee, reproduced in paragraph 18 of its First Report, "The Financing of Public Expenditure". He said:
The main expenditure decisions are taken first. This is something which is not done in any other country … it may mean that there is greater readiness to concede an increase in expenditure than there would be if it were necessary on each occasion to impose fresh taxation.
I am sure that that is right.
We cannot solve the problem of thresholds, the problem of the poverty trap or any of the other numerous problems which will be raised in the debate simply by taxing the higher income groups. If income tax were raised to levels which meant that no one in this country could earn more than £6,000 net, the total extra tax that would be raised would be 3 per cent. of present income tax. That would be just about enough to cut the basic rate by lp. So we should be merely fiddling around if we tried to do it that way.
To raise the tax threshold for married couples with two children to two-thirds of average industrial earnings, which would be a moderate demand, would cost about £1·9 billion. To obtain it from the rich, we should have to impose a ceiling on net incomes of £5,000, only about twice the take-home pay of the


man on average industrial earnings. It is not possible for any of us to conclude that we can solve the problem by taxing the rich any more.
I hope I have said enough to show that there is a need for widespread reforms. We have eroded the tax base by a plethora of allowances and a confusion of objectives. This has led to ludicrous distinctions between one allowance and another. If I am fortunate enough to find a house with a swimming pool, a conservatory, a greenhouse and other luxuries, I can obtain a tax rebate—indeed, a tax incentive—to have it, provided I do not exceed a mortgage of £25,000. There is a tax allowance to set against the interest paid to have those luxuries. But if I wish, for example, to educate my children privately—what a heinous crime!—to buy my children books or to take my wife to a performance of music by Beethoven, all the cost has to come out of net-of-tax income. I do not see why it should be considered better for an individual to buy a car than to pay to enjoy the music of Beethoven.
We could have a lower rate band, and I hope that the Chancellor will consider it. If we take income tax and national insurance contributions together, we see that we now start tax in this country at a comparatively low threshold but at a rate of 41½ per cent. That is far too high.
My right hon. and hon. Friends and I commit ourselves to the introduction of a tax credit system. We have been in favour of such a system for a long time. It was one of the victims of the two-party system. There is no doubt that in the Select Committee which considered it the idea was knocked on the head by the need of Labour Members to give the Chancellor of the Exchequer a reason for opposing it.

The Financial Secretary to the Treasury (Mr. Robert Sheldon): The Financial Secretary to the Treasury (Mr. Robert Sheldon) rose——

Mr. Pardoe: Yes, I thought that would get the hon. Gentleman to his feet.

Mr. Sheldon: Would not the hon. Gentleman agree that his desire to have lower rate bands would in practical terms be impossible under a tax credit scheme?

Mr. Pardoe: Yes. That is a matter we discussed at some length in the Select Committee, but, even with that disadvantage and some of the others, one of the Minister's own tax experts—Professor Brian Abel-Smith, who is now an adviser at the DHSS—said, in spite of the Minister's attempts to get him to change his evidence in cross-examination, that he believed that a tax credit system would in the long run be a vastly superior means of combating poverty.
We have 44 means tests—a means test industry. Those of us who have to spend our Saturday mornings sorting out these problems could, if we had for some reason to retire, probably make a handy income out of the knowledge that we have gained. Of course, we should have no time for anything else.
The hon. Member for Norfolk, North has suggested a minimum wage. We have advocated a minimum income, which is a rather different thing, and I would urge him to take into account the disadvantages of a minimum wage. The hon. Gentleman has also urged the taxing of benefits. I see no reason why not. Considering all the national Insurance benefits, which are conveniently set out in a double-page spread in the Economist this week, there seems no reason why some should be taxed and others should not. Certainly it is not a political reason, but is simply a matter of administrative convenience introduced in 1949 by the Attlee Government.

Mr. A. J. Beith: Does not my hon. Friend further recognise the deep indignation felt by such groups as war widows that their benefits are taxed while a considerable number of other benefits are not?

Mr. Pardoe: I am grateful. That is certainly one of the benefits that we would want to see moved from taxation. But I see no reason for these distinctions at all. I hope that the Minister may be able to justify some of them, although I do not see how he can. We are now taxing people to pay subsidies and subsidising them so that they can pay their taxes. That is a crazy situation which must be sorted out.
All of us will have reforms to suggest today, but inevitably they will be things of shreds and patches. We need a Royal


Commission on Taxation, concerned not only with personal taxation but with taxation right across the board. My own experiences on several Select Committees on proposed taxes leads me to conclude that we cannot solve the problem by considering one tax at a time. We must consider the totality of taxation, its correlation with benefits and the effect that that has on income.
I know that the Meade Committee set up by the Institute of Fiscal Studies is doing this job to some extent, and we look forward to its results with great interest, but there is no substitute now for a Royal Commission. In this House, above all we need a machinery for continually reviewing the impact of taxation not only on individuals but on industry and across the board and its relationship with welfare benefits, national insurance benefits and its impact on public expenditure.
This is the only legislative chamber in the world which does not consider income and expenditure together. As a result, the Government get away with murder. They can put forward a proposal on expenditure with which Members can feel reasonably content and for which they can vote because they are never called upon at the same time to consider its impact on taxation. Then, when the taxes are voted, different arguments are employed. We not only need to debate them together: we also need a permanent Select Committee to bring all these things together and review them continually.
I hope that this debate will convince the Government that their amendment is intolerably complacent. Of course we want a fair and progressive system, but we do not have one. The Government's measures—certainly those announced so far—will not take us towards a fair and progressive tax system. I therefore hope that the Minister will bring forward some proposals today, or at least that some will be made in the Budget, to sort out some of these problems.

Mr. Deputy Speaker (Mr. Oscar Murton): I understand that the Minister wishes formally to move the amendment in the name of the Prime Minister and to reserve his right to speak.

The Financial Secretary to the Treasury (Mr. Robert Sheldon): That is correct, Mr. Deputy Speaker. I beg to move, in

line 1, to leave out from 'House' to the end of the Question and to add instead thereof:
'believes in the need for a fair and progressive tax system, and endorses the Government's measures in that direction'.

4.47 p.m.

Mr. Victor Goodhew: I think that we all welcome the opportunity to discuss personal taxes just before the Budget, although I fear that the Chancellor may already have the Budget so tied up that nothing that we say now will have any effect upon it.
I share many of the views expressed by the hon. Member for Cornwall, North (Mr. Pardoe), although I would remind him that, during those 13 so-called wasted years of Tory Administration between 1951 and 1964, there was a steady reduction in the standard rate of income tax, no capital gains tax—except, in the later part, for speculative gains—no capital transfer tax and no wealth tax. So for the hon. Gentleman glibly to say that there is no real difference between the two major parties on taxation is to simplify things and even to mislead the House and people outside.
My first Parliament was that from 1959 to 1964, when I remember several occasions on which the Chancellor said that he would reduce the standard rate by 3d or 6d in the pound. I can now reassure the hon. Member on his doubts about whether tax reductions are an incentive to greater effort. When reducing taxation, the Chancellor used to give a figure for its cost in the current year and in a full year. It never did cost the amount foreseen, simply because, the moment that the ordinary taxpayer discovered that he would be allowed to keep more of his own money—I emphasise that it is his own money and not the Government's—and decide for himself how to spend it, he worked harder and earned more and paid more tax—but more tax on a higher income. In the process of earning that higher income, he produced more goods and therefore more wealth for the country at large. That proved conclusively that tax reductions are a distinct incentive to greater effort.
We know that the reverse applies to increases in personal taxation. Over the years, many people have found that the additional benefit of working overtime


was so much reduced by the higher rates of taxation they were charged that they decided to do a bit of "moonlighting". Even today, many people, having done a full normal week's work producing goods in factories, then do other jobs such as mowing lawns, washing cars or painting houses, for which they charge cash and pay no tax.
Having reached the stage at which people feel that it does not merit extra effort at work at their productive jobs in industry and in producing more jobs and wealth, one of the difficulties will be to persuade them that it is ever worth returning to spending all their time working at taxable employment as opposed to splitting it between some which is taxable and some which is not.
The other point that one must recall is that to have, as we have at present, a capital gains tax—again, introduced by a Labour Government—which takes no account of inflation is pure confiscation. It is quite ridiculous to suggest that just because someone, having saved money, buys a few shares, or whatever it is, and then sells them a few years later at a much higher price, he is necessarily getting a profit. It may be a profit on paper and in fact a loss in terms of purchasing power. The money that he gets in selling those shares after those few years may buy him much less than the original sum invested would have bought. It is, therefore, grossly unfair to continue with a capital gains tax which takes no account of inflation whatever.
If Governments wish people to save—despite the complete absence from the Chamber of Labour Members this afternoon, I imagine that even they wish to see investment in Britain—I do not know where they think that the saving will come from unless there are to be possibilities for private individuals to save. When we are told today that there is a complete collapse in the private enterprise system, or at least that there is insufficient investment in industry, the answer, simply, is that it no longer pays people to save or to invest. Therefore, the Government should look at the whole question of income tax and capital gains tax in that light as well.
With the capital transfer tax as well, and the proposal of a wealth tax to come,

or the threat of it, we have now reached the stage at which there is such a jungle of taxation that it is impossible for people to know where they stand. It may be accepted that the ordinary person who pays PAYE on his earnings knows roughly where he stands. I say "roughly" because plenty of my constituents visit me from time to time on Saturday mornings telling me that they simply cannot understand why certain amounts have been deducted from their pay packets. It often takes a great deal of trouble and many letters to Government Departments finally to discover why certain sums have been deducted. It is sometimes discovered that they have been wrongly deducted.
However, the fact remains that many people today have more complicated incomes, composed not only of salaries but of investment income and so on, and they require the services of an accountant to discover how much income tax they owe the Government and whether the Government are taking too much or whether they are paying too little. This is thoroughly non-productive work. It is a paradise for accountants, but it is a ridiculous state of affairs that one cannot have a much more simplified scheme in which everyone knows his liabilities and in which if he has a higher income, earned or so-called unearned, he knows how much he may keep.
We must dig up the whole system by the roots and start again. I am not sure that a Royal Commission is the right body to do this, because Royal Commissions seem to take so long. In our present circumstances in Britain today, I should have thought it vital that some speed was put into the matter of reforming the whole taxation system.
I would start off from the point of view of the hon. Member for Cornwall, North by saying that of course income tax should be tax on all income, and I do not see why it should not apply to all benefits or why one should pick out certain benefits and not others. We should try to work down to a much lower tax on income than we have today in order to encourage people to believe that any extra effort, whether by work or by investing savings and making their money work, is worth while.
I believe that it is time that someone faced up to the fact that this purely artificial division between what is called


earned income and so-called unearned income should be got rid of entirely. After all, when we talk about unearned income, most people tend to think of inherited wealth, of someone who is left a very large sum of money, which is invested and which produces a nice, cosy income for him. They think that that money is not earned and that the recipient should be penally taxed on it.
But that is not so for the vast majority. There are many people who during the course of their lives work hard and save hard for their retirement. They save hard and, having paid tax on their earnings, they invest their savings in a modest investment, such as stocks, shares or Government bonds, or something else, and they do so with the idea of providing themselves with some additional income during their years of retirement. In the vast majority of cases that so-called unearned income is simply the income on the capital saved out of taxed income, and it is quite ridiculous to differentiate and to charge a penal rate of income tax on that so-called unearned income. I hope that the Chancellor will be looking at that matter.
Capital gains tax must surely be adjusted to take account of inflation in times when we have a Government who happily allow inflation to run up to the rate of 25 per cent. a year. A pretty drastic adjustment will be required. As the present Government talk in their amendment about fair taxation, I say again that it is most unfair that capital gains tax is charged without any regard to the rate of inflation over the period during which the asset has been held.
Coming to capital transfer tax, I ask myself whether it is regarded as being thoroughly immoral and bad for a person who works hard and who saves money to pass it on to his children, whether during his lifetime or at his death. In many cases, on the contrary, it would be far better for it to be passed on during his lifetime to help the children get off to a good start. In so doing, one is very often helping to relieve the State of the burden of having to aid people later. But if this idea of providing for one's own family by transferring money to them is thoroughly discouraged, one will see people spending money rather than saving.
The Government must think very carefully before proceeding with any wealth tax if they are to continue with the capital transfer tax and the high penal rates of tax on capital gains and on income at present. If there were any proof needed of the fact that this system has got completely out of control and is now quite unacceptable, it is found in the number of what are known as high flyers, the really hard-working, high-earning people who have decided that they can stand the rates of taxation in Britain no longer and who leave the country. It is no good arguing that they should stay in the country which gave them birth and which may have given them training and so on. In the end, they will decide to take their skills and energies elsewhere, where they are better appreciated.
I sincerely hope that the Minister will take some of these thoughts back to the Chancellor of the Exchequer. As I said, I suspect that the Chancellor is wrapped up and busily occupied in other things this week—much too much to worry about what is being said in the House today. However, I hope that he will consider the fact that we have reached the absurd stage at which people are being discouraged from working. As has been pointed out, in certain circumstances it pays people not to work instead of going to work. That must be wrong for the country. The sooner the Labour Government faces up to the fact the better.

5.0 p.m.

Mr. David Steel: The hon. Member for St. Albans (Mr. Goodhew) has concentrated his remarks mainly on the problems, which are real, of those at the higher end of the income bracket. I want to talk about the other end of the income bracket. I want to talk about the other end of the scale, namely, those on the poverty line.
Our motion refers to the arbitrary nature of personal taxation. There is nothing in the Government amendment likely to inspire the House to endorse any measures designed at achieving a fairer and less regressive tax system.
Like all good Presbyterians I will begin my speech with a text. I take it from a speech in October 1974-by the Secretary


of state for Social Services with which I wholly agree. She said this:
An income adequate to live on must become the prerogative of every family, but the ways in which we make that income available are just as important as the money itself. Today too much of our welfare system tends to pauperise. In future every step we take must be designed to build self-respect. This means we must not separate the poor from the rest of society.
However, the poor are separated from the rest of society by a jungle of rules and regulations which are collectively known as the poverty trap and they operate in such a way as to make a wage earner very often worse off after a pay rise, because of the loss of social security and other benefits.
This situation is coming under increasing criticism. It can therefore be very little consolation to the supporters of a party which is basically committed to the eradication of poverty to find that the Labour Party sells this commitment but that, far from easing the viciousness of the poverty trap, during the Labour Government's period in office they have allowed it to become considerably worse.
I know that there are other excitements within the Labour Party at present, but it is a very sad commentary that on this issue there is not a queue of Government Back Benchers waiting to address themsselves to this important topic.
I want particularly to deal with two aspects, both of which were mentioned in passing by my hon. Friend the Member for Cornwall, North (Mr. Pardoe). The first aspect is the incidence of the tax threshold. We should not allow to go unmentioned the fact that 1975 was a milestone in the history of the Welfare State, in that it was the first year when the tax threshold for the typical family man about whom we always talk—that is, the married man with two young children—became less than half the average male industrial earnings.
In 1952–53 the average family man had to earn more than the average industrial earnings before he started paying tax. Since then, the threshold has become progressively lower until last year such a man had to earn only 46 per cent. of average national earnings before he started to pay tax.
Translating that into terms of hard cash, if the tax threshold had actually stayed at the 1952 level, taking into account increases in industrial earnings, the ravages of inflation, and so on, such a family man would be starting to pay tax this year on earnings of £52·48. In fact, such a family man starts paying tax on earnings of only £27·60.
As my bon. Friend said, the consequence of this lowering of the tax threshold is that the head of a household in full-time employment is liable to pay tax even if his earnings are below the Government's own established poverty line as laid down in the Short-Term Supplementary Benefit Regulations and the Family Income Supplement Regulations.
For that same average family man who at present has to start paying tax at a threshold of £27·60, under the Family Income Supplement Regulations the need established is £35, and under the Supplementary Benefit Short-Term Regulations, including the allowances for rent and rates, the needs assessed are £33·25. Yet on an income of £27·60 the tax system begins to bite.
This is clearly quite ridiculous and anomalous. Not only does it mean, as my hon. Friend, possibly with some typical exaggeration in terms of North Cornwall represented, that a large part of the work force would be better off out of work than in work, but it also gives rise to a situation in which one Government Department gives out a benefit only for another Government Department to grab it back.
Again taking the typical family man with two children and earning the Trades Union Congress minimum recommended wage of £30, his family is entitled to claim £1·80 family income supplement from the Department of Health and Social Security, but it will have to pay back £1·72 to the Inland Revenue in income tax. Therefore, for a gain to this family of 8p the whole weight of two Government Departments is involved in a transaction.
It is little wonder that bureaucracy is Britain's only growth industry. It is enormously wasteful in terms of administration. It is a source of great bitterness and heartache for the lower-paid family, My hon. Friend and I both represent


parts of the country where earnings are well below the national average. Every week people come into our surgeries with their pay slips and point out illustrations of this anomaly. It is true that for many of our constituents it just does not pay to work full time.
Apart from the tax threshold, there is also the effect of the clawback. This is the automatic reduction of social security and other benefits such as council rent rebates when a wage earner gains an increase in earned income. This is particualrly severe in the case of earning widows and old-age pensioners who might have a part-time job for perhaps one afternoon a week or one day a week. It applies also to full-time workers.
About 50 per cent. of people stand to gain nothing from a rise of £1 a week in their wages. Another 150,000 would get less than 24p. The Government claim that this is just a theoretical problem because some benefits are not reduced until six months after the increase of income has been earned. It may be theoretical to the Government, but it is a nightmare and a heartache to those affected by the rules.
There was a particularly good illustration of the application of the rules in the Sunday Times last month. The case of a family was quoted. There were three children in the family. The net income was £30. Two of the children enjoy free schools meals at present. The young child enjoys free milk. Family income supplement is received. An increase in income of £5 would wipe these benefits out and increase the family's tax burden to the point where they would be less well off than before getting such a £5 increase.
Some recognition of this has led the Government to oppose any mean-testing of new benefits which they seek to introduce in the future; and they cite the child interim benefit scheme which is to start next month as an example. It is payable to lone parents at the rate of £1·50 a week, but it is taxable and it is taken into account in assessing supplementary benefit and family income supplement. Therefore, it is unlikely that many families will gain anything at all.
The Child Poverty Action Group, in its pre-Budget memorandum to the Chancellor which it has circulated to all Members, said this about the scheme:
It has now become clear that few single parent families will benefit from the move to CIB. For example, all those who are at present dependent on benefit—that is, those on national insurance or supplementary benefits—will gain precisely nothing from the special family allowance. Indeed, these groups are being advised not to apply. Furthermore, those single parent families where the breadwinner is in work and who are above the tax threshold and claiming more than £1·50 a week for FIS, will be made worse off through payment of tax and clawback arrangement on their child tax allowance. Only the small minority of single parent families (where the parent is working and not paying tax, or not drawing means tested benefits) will benefit financially from the interim benefits.
So, despite the fanfare with which this benefit was launched, even the Government have been forced to accept that the Child Poverty Action Group is right in its conclusions. In answer to a recent Parliamentary Question the Under-Secretary of State for Health and Social Security said that of the quarter of a million families likely to claim, fewer than 5,000 will by this measure be raised above the family income supplement level.
Furthermore, the way in which the Inland Revenue has sent out amended tax codes to all single parents in work, reducing their tax allowances on the assumption that they will claim the new benefit, is evidence of the callous way in which Departments work and how the poverty trap operates. Under this Government, as under previous Governments, what the welfare man giveth the tax man taketh away. We argue that it is time to take positive action.
I shall not repeat what was said by my hon. Friend the Member for Cornwall, North about our proposals for a negative income tax. My hon. Friend was a member of the Select Committee which went into that subject in some detail. Last week, when I asked the Chancellor of the Exchequer what plans he had for the introduction of such a system, he said that he could not anticipate his Budget statement. May be he could not anticipate it, but we are entitled to do so on behalf of those families throughout the country who hope that some relief will be forthcoming when the Budget is announced.

5.12 p.m.

Mr. John Wakeham: I support the Liberal motion. Although I do not necessarily agree with every word in it, broadly speaking it has my support. If it does nothing else it shows up the inadequacy of the Government amendment. The only thing that can be said about the amendment is that it is brief. It reads:
believes in the need for a fair and progressive tax system".
Surely we all agree with that. The second part of the motion endorses the Government's own measures. I very much look forward to hearing the Minister's speech. I hope that it is fuller and more adequate than the amendment.
I shall not argue whether taxation is an incentive or a disincentive. My feeling is that it is overwhelmingly a disincentive. Surely we all agree that salaries and wages play a substantial part in determining how hard a man is prepared to work and how much responsibility he is prepared to take. The level of financial reward must play a great part in the encouragement of young people to learn skills and to become proficient either in a trade or profession. If that is so, we are right to examine our system of taxation and to ascertain whether our policies are meeting that objective.
I agree with a great deal of what was said by the hon. Member for Cornwall, North (Mr. Pardoe). I know that my hon. Friend the Member for Norfolk, North (Mr. Howell) will be pleased with the way in which the hon. Gentleman has used his research into those in receipt of supplementary benefits and the anomalies that arise. My hon. Friend has been pursuing that line ever since he became a Member in 1970. It has taken him the best part of five years to have accepted what now appear to be self-evident truths. My hon. Friend has been a lone voice crying out what is obvious common sense to anyone who considers his words. It has taken him five years to get across his message. I think that his arguments are now accepted within the Conservative Party, but he has not yet succeeded in getting them across to the Government.
One of the self-evident truths that my hon. Friend has put forward concerns post-tax incomes. I feel that the Government should be concerning themselves

with the upper end of the scale in view of the vacancies that they seem to be creating in the nationalised industries. We must also be concerned about those who are to fill the top and important posts in our economy.
I believe that I am correct in saying that the after-tax income of the top 1 per cent. of earners is approximately four times the after-tax income of average earners. That distribution across the board is not that very far different from the post-tax distribution of income in a country behind the Iron Curtain. Over the past 40 years we have moved towards a substantial degree of after-tax income equality. I estimate that about 40 years ago the difference between the post-tax income of the top 1 per cent. of earners and the post-tax income of average earners was about 12 to one. There has been a substantial switch towards net income equality over the past few years. I believe that it is having a detrimental effect.
The distribution of capital has moved substantially towards a system of equality. We have moved further than is realised. This is an argument that many do not want to discuss. It is said that 10 per cent. of the population owns approximately 80 per cent. to 90 per cent. of all the country's assets, but that argument is destroyed if we take into account the value of pension rights. If that factor is introduced we have a situation in which some 45 per cent. of the population, as opposed to 80 per cent. to 90 per cent., owns the country's assets.
The figures are all the more distorted because capital is unevenly distributed between husbands and wives and between the young and the old. I agree that there is a considerable unequal distribution. It is a situation which I want to see remedied. However, uneven distribution and the ability for people to earn and to keep what they earn are essential parts of the system.
I do not think it is realised how far we have moved in the direction of equality. We have some of the highest taxation in the Western World and one of the lowest economic performances. Perhaps it is not a coincidence that such a high level of taxation occurs in a country whose economic performance leaves a substantial amount to be desired.
There has been a substantial increase in direct income tax over the past 10 or 15 years. In 1963 about 5 per cent. of net disposable income was paid in income tax. That has now increased to about 25 per cent. That increase is one of the major causes of inflation. The pressure for higher wages so as to maintain standards of living virtually rules out the possibility of paying people sufficiently well to take on onerous jobs.
My argument does not apply only to people who enjoy very high levels of income, those who might be induced to run the nationalised industries. It also applies to middle management. For example, if we wanted to increase a man's post-tax income from £8,000 to £12,000 in reward for taking on a responsible job, it would be necessary for there to be a pre-tax increase from £15,000 to £30,000. This is a major additional cost to a firm when seeking to find somebody to take on the responsibilities of running a major company.
I conclude by making three points. I wish to draw attention to some recommendations made by my own institute, the Institute of Chartered Accountants. The Institute has put forward some excellent suggestions to the Chancellor of the Exchequer and I hope that he will take note of them. Reference is made in those suggestions to the practical difficulties arising from taxation dealt with by means of extra-statutory concessions—concessions which come to the public's attention in a variety of ways, including Press releases, statements in Parliament, letters in professional journals, and so on. It is time that all the agreed anomalies which exist—and which the Inland Revenue, to its credit, tries to deal with by way of extra-statutory concession—were dealt with in a special Bill, rather than in the Finance Bill, in order to allow Parliament a greater amount of time to consider these matters.
I am not wildly enthusiastic about indexation of allowances, but I believe that the Government has a responsibility in that respect. I hope that the Government will examine a number of allowances which have not been increased since 1970. If the Government do not wish to bring in indexation of allowances, they at least have a clear responsibility

to see that those allowances at least move broadly in line with the rate of inflation.
Furthermore, I believe it is time that the Inland Revenue re-examined expenditure wholly and exclusively incurred for the purposes of trade, which is not always allowed by the Inland Revenue in computing profits for income tax purposes. To give a few examples, there is the cost of leases for business premises, the cost of raising capital, the cost of abortive capital expenditure, and the question of exchange losses in respect of non-sterling balances. There are a number of items of expenditure which are incurred by people under Schedule D wholly and exclusively for the purposes of trade but which, because of anomalies in our tax system, are not to be deducted in computing profits or in arriving at the taxable sum. I believe that the situation is wholly unfair.
The Liberal Party has done the House a service in enabling hon. Members to debate this important subject. I hope that the Government will listen carefully to all the points made so that in future we may see a fairer and more reasonable taxation system.

5.24 p.m.

Mr. John Golding: I, too, look forward to a fair and reasonable taxation system. However, my notion of what is fair and reasonable is very different from that put forward by the hon. Member for Maldon (Mr. Wakeham).
People are worried about personal taxation and believe that the burden is too great. The Government are well aware of the situation. Many items of public expenditure, desirable in themselves, are to be cut in the next few years because of the pressure that has arisen as a result of the growing incidence of personal taxation. The Government are aware of the feelings of many people, particularly those on low incomes, that thresholds are set at too low a level. I look to the Government in the coming months to see whether, as part of a wages deal with the trade unions, they can perhaps make concessions and raise thresholds.
It cannot be denied that there is pressure from those on average earnings, and indeed from those with higher-than-average earnings among the skilled and manual workers generally, to bring the Government to recognise that too much


money is taken out of the weekly pay packet in taxation. That has to be said. Perhaps in the coming year my right hon. Friend the Chancellor of the Exchequer will be right to consider the possibility of a wages deal with the trade unions which implies that, in return for tax concessions, the trade unions will accept less in wage increases from 1st August. These ideas are now worthy of discussion between the Chancellor and the TUC and all those interested in our economic well-being in the coming year.
The incidence of taxation is felt to be too high, but that does not of necessity mean that those of us who are inclined to be radical constantly wish to plead for lower taxation. I support the Government's public expenditure White Paper, but I do so with regret. I wish that people were prepared to pay more out of their earnings for many items supported by the public purse. I find it regrettable that I must tell deputations of pensioners that they cannot have all they demand because those who are in work are not prepared to pay a level of insurance contribution or an amount in tax necessary to give the pensioners all they seek.
We can look at almost every item of public expenditure in that way. We can say to the teachers that they cannot have the money they wish to see spent on education because people are not prepared to pay the amount in tax that is necessary to maintain the best possible education service. We can say the same to doctors and nurses in terms of what people are prepared to pay to maintain the best hospital service. This applies throughout the whole fabric of our society.
I think that the Liberal Party is being somewhat ambivalent on this point. We must recognise the reality that working people, among others, are not prepared to pay higher levels of taxation, although when we look at areas of need and distress we wish in our hearts that people who receive good incomes were prepared to pay more towards these ends.

Mr. Goodhew: The hon. Gentleman paints a sad picture, but he ignores a very large area of Government expenditure which has nothing to do with the well-being of the people to whom he

refers. He is ignoring all the effort put by the Labour Government into nationalising the aircraft and shipbuilding industries, which is absorbing large amounts of Government money. That exercise will require heavy sums of taxpayers' money to administer. The Government should get out of those areas and concentrate on doing things that people cannot do for themselves. If the Government did not interfere in those other matters and concentrated on looking after old age pensioners and on maintaining a good Health Service, it could be managed perfectly well out of taxation.

Mr. Golding: I did not notice that those issues were looked after very well by the last Conservative Administration. I do not think that the Tory philosophy enabled them to look after the weak and the deprived as they ought to have done by using taxation or anything else. The answer to the hon. Gentleman is simple. For decades taxpayers' money has been poured into the aircraft and shipbuilding industries. It is an irrelevance to discuss that subject.
I was making the serious point that there are competing pressures upon us. There is pressure from those in need, who want more, and there is pressure from those who do not wish to pay more taxation. I listen to and understand both points of view. I regret that it is not possible for us, at present, to persuade our people to accept the levels of taxation which would be necessary to support the type of Welfare State I would like to see—even though I know that wealthy Conservative Members will never have had any experience of a Welfare State.

Mr. Beith: Will the hon. Gentleman address himself to the point that some of the people he is asking to bear this level of tax would, if they chose to rely on the Welfare State, get more than the net income left to them now when they have paid tax?

Mr. Golding: When we are talking about increasing thresholds and other methods of financing welfare I am prepared to listen to the objective arguments of the hon. Member for Berwick-upon-Tweed (Mr. Beith). I am sorry that he intervened at that point because I was trying to argue against the non-serious point put by the hon. Member for St. Albans (Mr. Goodhew).

Mr. Goodhew: The hon. Gentleman is wrong to accuse me of making a non-serious point. I am making a perfectly serious point and he knows it. It is not a question merely of financing the Welfare State out of taxation; it is a question of financing a lot of other Government activity—activity in which the Government ought not to be involved. The hon. Gentleman should come and talk to the Hawker-Siddeley workers in my constituency. He will find that they are very sad about being taken over by the Government. They will tell him that they wish that the Government would keep out of such things and concentrate on the Welfare State. We care about people, too. The Labour Party has no monopoly in care and concern for human suffering.

Mr. Golding: Generations of Chancellors would have wished that the aircraft and shipbuilding industries had been able to stand on their own rather than financed to a large extent by public money. Chancellors would have been delighted if they had not had to listen to representations from Conservative Members drawing attention to the fact that shipyards in other countries were State-subsidised. The hon. Member's contribution is an irrelevance.
I cannot accept the motion in its entirety. It says
the impact of personal taxation is both arbitrary and too heavy".
Here I take issue. I believe that the incidence of taxation can be argued to be too heavy for certain groups. I do not believe, although it has been argued by some Conservative Members, that it is necessarily too high for the very rich. I do not believe that the Chancellor should try to bring about a situation in which the very rich pay less taxation.
That is not to say that changes in taxation may not be desirable. It may be desirable to reduce taxation on those company profits which are ploughed back in investment rather than distributed. I would strongly object if, in his Budget, the Chancellor were to relieve the very rich of paying some taxation. There is still scope for increased taxation of the very rich. In the total scheme of things that is not a point that I would argue from a Revenue angle. I just cannot accept that the very well-off cannot stand the present burden of taxation.
I cannot support the call made in the motion for a Royal Commission on Taxation. If there are things that need to be done to ease the burden of taxation for the poor and needy, they ought to be done now. We do not require a Royal Commission to tell us that the thresholds ought to be raised. There is a growing tendency to create committees of inquiry and Royal Commissions which simply delay the implementation of radical proposals.

Mr. Pardoe: I accept the point that the hon. Gentleman is making generally. Does he not accept that the shreds and patches of taxation legislation which we have enacted over the years have left us with an intricate maze of taxation anomalies which can probably be sorted out only by the kind of overall survey that a Royal Commission would give? Does the hon. Gentleman not accept that, even if we changed the thresholds, we would still have appalling anomalies at the lower end of the income scale caused by the fact that we do not tax all national insurance benefits, including unemployment benefit? Does he not think that we might need the evidence of a Royal Commission to get away with that difficult political point?

Mr. Golding: I made representations to the last Conservative Administration saying that I thought it desirable, in the treatment of social security benefit, to cease to give tax relief on contributions and not to tax benefits. I am certain that that is the right way forward. We do not need a Royal Commission to tell us that that is the simple solution to the taxation of widows' benefits and suchlike.
I do not believe that the procedures of this House are so defective as to need overhauling in this direction. From the time the Chancellor presents his Budget to the enactment of the Finance Bill this House spends many days and weeks considering the fundamental matters referred to in this motion. I understand that the Budget debate will last for a week this year. It will be possible for hon. Members, having looked at the tax position and arrived at certain conclusions, to argue their own taxation philosophy. We should not always need a Royal Commission to tell us what changes in the law are required. I had always thought that


it was part of my job to find out what changes people wanted to be made in the law and to put their point of view in the House.

Mr. Beith: Will the hon. Gentleman consider the difficulties facing any hon. Member who tries to do that? I do not know whether the hon. Gentleman has undergone the long slog on Standing Committees considering Finance Bills, but it is not possible for Back-Bench Members to make proposals to increase the Government's revenue, thereby altering the distribution of taxes. The exercise on the Finance Bill is tightly constrained so that major and even trifling changes cannot be proposed. Government spokesmen say, "The Opposition may ask us to cut the revenue but they cannot ask us to increase it because the procedure does not allow it."

Mr. Golding: I have spent many hours as a Whip listening to discussions in the House on Finance Bills. However, I was not referring to Finance Bill debates. I was referring to the week of debates which follow the Budget. I understand that in that week it is possible to present coherent alternative strategies to the Budget. A week is a long time in politics and in debate, and if the Liberal Party wishes to influence the House it should be possible for its members to present their alternative strategies in that week—if they have them. If the argument were that the Liberals do not have a coherent policy and that they would like a Royal Commission to find them an alternative policy, I would perhaps view their argument with more sympathy, but I do not think that they take that view. If the Liberal Party says that it has a coherent alternative strategy, it should present it during Budget week and allow the House to decide what it thinks of its ideas.
It is possible for the House to review the effects on the taxpayer of Government income and expenditure. I do not propose to speak at length on that matter but wish merely to draw attention to the fact that only recently we had a two-day debate on the impact of the public expenditure White Paper on the vast range of services provided by the Government.
In conclusion, may I say that I recognise the pressure that there is on hon.

Members because of the incidence of taxation.

Mr. F. P. Crowder: When the hon. Gentleman finishes his excellent speech, will he have the grace to leave the Chamber and then there will be nobody on the Government Back Benches?

Mr. Golding: It would have been better if I had not allowed the hon. and learned Gentleman to make that intervention. I have learned from my mistake. No doubt Labour Members decided not to come into the Chamber on hearing that I was about to speak—and who can blame them?
There are pressures on us against further taxation, but I plead with the radicals in the Liberal Party not to go too far along that path. When pressure is put on us to urge reductions in taxation, we owe it to our radical past to say "Yes, but …" and to spell out to our constituents the need to finance pensions, the National Health Service, education, and so on. I say that to the Liberals in the knowledge that if I say it to the Tories it will be a complete waste of time.
I accept the Government amendment and I am confident that I shall be able to vote for it, but the Liberal Party's motion is deficient in several respects.

5.46 p.m.

Mr. David Penhaligon: A proportion of the problem of personal taxation is the direct result of inflation. I once tried to work out what the national average wage would be on the day that I retired if the then current rate of inflation—about 23 per cent.—was maintained. The day on which I retire will be in the year 2009 and therefore it is some way away, but even so the calculation is interesting. I came to the conclusion that, on the then current rate of inflation, the average wage when I retired would be just over £40,000 a week. That would represent, before tax, an annual income of £2 million a year—a princely sum—and if I could have only a small proportion of it today I should be able to solve many of my problems. Without any change in thresholds, which is what we are discussing as much as anything else, on an income of £2 million there would be, according to the calculations of my


hon. Friend the Member for Cornwall, North (Mr. Pardoe)—I do not normally deal in levels of taxation and therefore the calculations are beyond me—tax of £1·6 million, or just over 80 per cent.
In a period of inflation, by not adjusting the thresholds in line with earned income, the percentages paid in tax gradually increase. Before anyone gets excited about the idea that he may earn £2 million in 2010, I should point out that, according to my calculations, potatoes will be just over £1,500 each and my house, modest property though it is, will probably fetch on the open market about £8 million. There is a good chance that at least half my generation will pass to another world virtually millionaires.
One of the reasons for this situation is sheer undiluted politics. We are talking about the fiddling of indexes. Governments have increasingly taxed earned income and have been less willing to raise revenue by indirect taxation. Increasing VAT and reducing income tax may slightly distort the income pattern in a way that I should not like to see, but there are other ways in which the problem can be overcome. However, the effect time after time is that a larger percentage of the Government's revenue is raised through personal taxation.
That is a reflection of the domination of our political thought by an index which it is fashionable to discuss at the time. At one time it was fashionable to use the balance of payments. We seem to have given up that battle for lost, so now we discuss the cost of living index. The domination of the cost of living index in the past two or three years has caused a sizeable proportion of our problems.
Like other hon. Members, I have regular surgeries in my constituency. Occasionally I am asked, not "Did you support this?", but "Can you explain why the Government did it?" I feel that I ought to rally round my colleagues in Parliament and at least try to explain the logic of the Government's decisions even though I may have voted against them. I sometimes think that the definition of a good Liberal is one who understands both sides of the arguments so well that he cannot make up his mind.

However, there are some decisions which dumbfound me.
For instance, a self-employed man with the enormous income of £31 a week pays 35 per cent. income tax on his marginal pay and an additional 8 per cent. in national insurance contributions. If he succeeds in increasing his profit by £1 per week—not exactly a large sum—the Government require 43p of that for their coffers. I have no wish to defend that situation and I find it difficult to explain to my constituents.
If the same man increases his income to £90 a week, which is at least a reasonable income, his level of taxation drops. In explaining the reasoning behind this to my constituents, I do not defend my parliamentary colleagues with the enthusiasm that an hon. Member perhaps should. I describe it as one of the idiocies of the legislation we pass. A self-employed person pays a lower level of taxation on the 85th pound he earns than on the 32nd. Anybody who thinks that is right deserves to have his head examined.
I was interested in the earlier references to the child interim benefit. My hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel) said it would be both taxed and count against supplementary benefits. I am particularly interested about what will happen next year when it becomes the child benefit and available to all families. I was interested in what the hon. Member for Newcastle-under-Lyme (Mr. Golding) said about the ability of hon. Members on the Opposition Benches to affect legislation. I spent a substantial time trying to find a way to put on the Order Paper a motion that this benefit should be taxed. I do not want to go into the merits of the argument now though I think it should be taxed. It would have a redistributive effect on income for the purpose of increasing the income of the low paid, who are the people I am most concerned about. Despite the levels of taxation about which they complain, the higher paid seem to be able to look after themselves quite well.
I made a substantial effort to find out how an ordinary Back Bencher could put such a motion on the Order Paper and at least get the matter discussed. I was


told to go to the Ways and Means Committee. I had never met it and was not quite sure what it did or where it hid. Eventually, I discovered that my party had not a single member on that Committee, which had to approve any motion for increasing taxation before it could be put on the Order Paper. The Government have a majority on the Committee and it is a difficult task when one does not have a single colleague to support one's case. Even on a relatively minor matter like taxing this benefit, I found no way in which I could get the matter discussed.

Mr. Golding: Did the hon. Member try to discuss it during the Budget debate?

Mr. Penhaligon: I am delighted that the hon. Gentleman has raised that point. Mr. Speaker was in the Chair—he was Mr. Deputy Speaker then—when I tried to raise this matter on the Third Reading of the Finance Bill. I think it was the shortest speech I have made in Parliament. It ran to just four lines in Hansard before I was told I was not allowed to speak on this matter.
I mentioned it in the Second Reading debate, but like so much of what is spoken in this House—usually with substantial wisdom—it went in one ear of the Government and out the other. Such speeches get into Hansard, but have little result.
The treatment of the disability allowance is another matter which is beyond me to explain to constituents. The allowance is, in effect, a recognition of the fact that a retirement age of 65 is a nonsense for some people. They reach a stage some time before their 65th birthday when it becomes clear that their working life is over. We pay them the benefit, equivalent to a retirement pension, as a recognition of the fact that, in effect, they have had to retire early. On the great day these people reach retirement age, they ask why they are suddenly £3 a week worse off. The reason is that we tax pensions, but not the disability allowance. For some obscure reason, a man whose ailments have not changed in any way is supposed to exist on £3 a week less.
Of course it is easy to stand here and talk about methods of reducing taxation,

but I have already indicated support for two increases. But I think the hon. Member for Newcastle-under-Lyme would agree with me—though I might have a job persuading some of my hon. Friends—that a Royal Commission could look at the number of tax allowances given on extremely high incomes.
The economy of my county has been wrecked by the tax relief on mortgage interest. How can a Cornishman earning £40 a week who wishes to buy a house in Mevagissey, Pentewan, Porthtowan, Perranporth, St. Mawes, or anywhere else in my constituency compete with a man who already owns one house and, when he comes down from Birmingham to buy a property in Cornwall, gets a Government subsidy of up to 85 per cent. on the interest on his mortgage for the Cornish property? Of course, Cornish-men cannot compete. A flood of good housing in my constituency has gone to people who have no need of it, and this is one of the scandals of our age. It is caused by the tax allowance. I understand that it is possible for somebody who earns enough virtually to run a harem at the end of his working life.

Mr. Golding: It is a bit late then.

Mr. Penhaligon: This is an area into which I do not wish to enter, because we have enough problems already, but I understand that it is possible to divorce one's wife, have a court order made for maintenance and charge that against tax. Why should a humble 35 per cent. taxpayer like me get less from the Government for subsidising my ex-wife than a millionaire who is an 85 per cent. taxpayer? I can think of no logical reason why that prejudice is held against me.
I admit that it would be unfair to phase out allowances overnight because it would distort a person's taxed income pattern to such an extent that he would be unable to meet his liabilities. But the day has come when tax allowances for mortgages and court maintenance orders should not be granted at more than the standard rate. That would have a good effect on housing in my constituency.
Under recent legislation the Government are required to increase pensions in accordance with the cost of living or the average wage, whichever is greater. That


is a good rule of which the House should feel proud. We shall be able to guarantee pensioners at least a consistent standard of living. But there is a risk that that promise will become a nonsense in the near future.
If no change is made in the single person's tax allowance in the forthcoming Budget, a woman who retires at 60 will pay income tax. If the Government increase her pension by 15 per cent. to compensate for the increase in the cost of living and take back 5 per cent. in tax her income will be increased only by 10 per cent. I wonder whether that is a deliberate policy, whether it is a new way of raising revenue. If it is not deliberate, I wonder whether it is legal. We shall not be guaranteeing that person's income against a cost of living increase or against the average wage. That person will have a real decrease in her standard of living.
I ask hon. Members to support the motion. It is time for a review on the impact of personal taxation especially at low income levels. Although Members of Parliament complain, we are a lot better paid than are my constituents. There are few of my constituents who would not take my job for the money. Taxation hits my average constituent who earns £36 a week and has a family to support—and there are thousands of them.

6.3 p.m.

Mr. Peter Bottomley: It is a pleasure to follow two speakers who were elegant and inoffensive. If I hesitate to say which was which I hope that I shall be forgiven. I am glad that the Liberals have taken up a subject which, being in favour of motherhood and against inflation, I regard as important. The people who suffer most from arbitrary and heavy taxation are those with children to support.
I am sorry that the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) is not here. I recall reading in a recent pamphlet which he wrote that there were at least 24 Liberals in the Tory Party in the House of Commons. How pleasant it would be if the Liberals could reconcile their differences and join us on the Tory Benches, where most of them, and most of their supporters, belong.
There are three groups who are affected by the arbitrary and heavy levels of taxation. The first group consists of people who are trying to create businesses. In my previous job I was in discussion with a group of people who wanted to set up a common ownership firm. They worked out how much they could borrow, how much interest they would have to pay, how much profit they could make and how much tax they would have to pay on the profit before they could call the business theirs. I am driven to recall the endeavours and the success that that group of people would have to have to build up a business worth £500,000, employ 50 people and perhaps export a little to the Middle East, when the alternative, according to page 11 of Labour Weekly, is to win £500,000 on the football pools. It is important to get the right balance. Arbitrary wealth is just as reprehensible as arbitrary taxation on those who are trying to create wealth.
The second group of people who are hit heavily by taxation are those who earn a great deal of money and have to commute. That was brought home to me in Frinton when I spoke there a fortnight ago. A fortunate man there said that he paid taxation at the highest level of 98 per cent. To pay for his £502 a year season ticket to London it cost him £22,000 a year in pre-tax income.
The third group to which I wish to refer are the pensioners. One has to explain to pensioners why a £20-a-week subsidy is given to every British Leyland worker while it is stated that an increase in the £13·60 pension is not possible. I find that I cannot explain that. We have moved on from the situation described by the hon. Member for Newcastle-under-Lyme (Mr. Golding) when he demonstrated the near-unanimity of the Labour Party and the Back Benchers on one subject, which is, presumably, not listening to the opinions of a leading Labour Party economist. To transpose what he said, how can we claim to be helping those in greatest need, who are the pensioners and the low paid with children? We have large and indiscriminate employment, housing and food subsidies and to that extent the Liberal motion basically justifies itself.
The most important group about whom I am concerned are the people with children. There are 13½ million parents sharing 14 million children—over half the population of the country. They are not represented in the House as a group, as trade unionists are represented. They are not taken into account when the Government meet the CBI and the TUC. I am not making a point against the trade unions. It is difficult for the trade unions to say that there must be fairness between their members who support children and their members who are past childbearing age. It is a good sign that on Wednesday the Chief Secretary is to meet a group led by the British Union of Family Organisations, of which I am the unworthy chairman, to put the case for the single parent family and other families.
To illustrate how discrimination against families has occurred during the past year one has only to consider the £6 income limit compensation for inflation. That amount would be the same for you, Mr. Speaker, with no immediate dependants, as it is for a man with a wife and two children. You would have £6 a week for yourself, whereas the family with two children would have only £1·50 per head. That illustrates the case for a sensible tax credit scheme which brings together welfare and taxation.

6.10 p.m.

Mr. David Howell: This debate has been an overture to the great economic and financial debates to come after the Budget. As such, it is welcome and gives an opportunity to air our preliminary views. I wish to make clear the Conservative Opposition's attitude to the motion and the amendment.
The amendment is a frivolous defence of the indefensible. No one seriously imagines that the Government have had much success with their fiscal measures. Most people, including some in the Labour Party, would say that the last two years have been a record of appalling fiscal incompetence. One need say no more than that about the amendment at the moment, except that I shall advise my right hon. and hon. Friends to vote against it.
In considering the motion itself, we all share the desire for a lower burden of

taxation, but I have doubts about this yen of the Liberal Party for yet another Royal Commission on Taxation, this desire to grasp hold of some wholesome reform which will produce a perfect system. I do not know whether the Liberals have had time to think the thing through or have studied the experience of another Liberal Party, in Canada, which also went for the Royal Commission on Taxation solution and got into the most fearful difficulties.
Our view is that taxation is a living thing, and that even if one says, "Let us stop the world and start again", it cannot be done. That is what the Canadians found. One of the most eminent Canadian authorities on taxation summed up the wildly over-ambitious and wildly comprehensive reforms which came out of the Canadian Royal Commission as a "political and economic Vietnam" for the Canadian Government. He pointed out that the Canadian Government had attempted a major and comprehensive attack on the whole pattern of Canadian taxation, with the result that they were wildly over-stretched and that the pressures on the whole system, including on business men who had to unlearn the past and learn a new system, nearly led to total fiscal breakdown.
Therefore, I have grave doubts about the Royal Commission on taxation approach, and if the Liberals think it through more carefully and study the Canadian experience, I am sure that they will realise what many others have realised—that the way forward is a more cautious and less ambitious one, and that the idea of clearing the decks and producing a Utopian, radical new comprehensive-for-all-time taxation system belongs to cloud-cuckoo-land or to the land of Liberal manifestos.
That does not mean to say that we are against more elaborate consultation on taxation reform. We have always taken the view that there should be plenty of consultation on taxation. That is borne out by our record in Government and the publication of a number of Green Papers. We believe that that principle should be carried into the future, particularly in relation to capital taxation. We approach the future of capital taxation in a diametrically opposite way to that of the Labour Government, with their appallingly mismanaged introduction of capital


transfer tax. While we want more consultation, and we like the idea of a lower burden of taxation if it can be achieved, I shall not be suggesting to my right hon. and hon. Friends that they should necessarily support the Liberal motion.
First, I turn to the overall burden of taxation and how heavy it is. I agree with the hon. Member for Cornwall, North (Mr. Pardoe) in his warning against the difficulty of making international comparisons. That has not stopped some hon. Members from doing it, but such comparisons can be misleading. However, there are some areas where we can agree.
First, there is no disputing that amongst the OECD countries the United Kingdom has the highest marginal rates of income tax. That fact seems to be agreed on both sides of the House. I notice that even Labour Weekly, which we all seem to be quoting today, states that the highest marginal rate—83 per cent. on earned income and 98 per cent. on investment income—is but "a fig leaf" to cover our "Socialist conscience". It will need a good deal more than a fig leaf to cover the Socialist conscience nowadays. But at least even in that quarter the realisation is at last penetrating slowly into the minds of those who write that publication that these inane and silly levels of taxation satisfy no criteria of social or any other kind of justice or fiscal common sense. There is no disputing that, and I do not think that the Treasury Bench would try to defend the situation.
We know, too, that amongst the OECD countries we have the highest level of capital taxation. That seemed to be the position before the capital transfer tax was brought in, and obviously it will be even more so since that tax was added to the previous structure.
Finally, we know that we are near the top of the list, preceded, I believe, only by Denmark and Sweden and possibly in some circumstances by Norway, for income tax. That is the position if one makes a table of tax "awareness" based on the amount of income tax and national insurance contributions actually paid by the employee.
Thus, the old cry which one still hears from the Labour Party that we are not

so highly taxed after all no longer stands up to any comparison of any kind. Not that comparisons are needed. We know that the tax burden in this country has reached absurd levels, that per household total taxation has increased in the two years between 1973–74 and 1975–76 by no less than £688.
Thanks to the work of a number of people such as my hon. Friend the Member for Norfolk, North (Mr. Howell), we know that the effect at the lower end of the scale of this kind of increase has been devastating, particularly in the area of interaction between income from work and benefits from social security, about which we shall hear a lot more. My hon. Friend describes circumstances in which for many thousands of people the marginal rate of tax, plus all the other interactions of social security benefits, was well over 100 per cent. and in some cases 200 per cent. He describes a situation in which a man at work on £45 a week with two kids could, at the end of the week, find himself worse off than someone in the same circumstances who had stayed at home all week.
All this will get worse with the up-rating in November of social security benefits, which, under the present law, will have to be in the region of 22½ per cent. All these problems, appalling now, will be far more appalling in November when that takes place. On that score alone, the need for the Government to do something, and something very significant, is overwhelming. I will come in a moment to discuss what elbow room the Government have to meet this burning need.
In surveying the income tax scale up to management level, again we have a critical situation—a situation which the Chancellor of the Exchequer described as one in which people were receiving, in his own uniquely unattractive phraseology, "quite a caning". It is a situation recognised outside the country as verging on the ridiculous. On a recent visit to the United States, I found that the number one worry of American businesses who have invested or have subsidiaries here has now become not labour troubles but the level of taxation on management. They find they have to deal daily with requests from those already here to serve in branches elsewhere or requests from


those they wish to post to the United Kingdom not to come here because of the levels of taxation.
Of course, all this is subjective judgment. It is not a scientifically-researched statement. The hon. Member for Cora-wall, North said that these things could not be objective. Of course not. There is no expert objective opinion in a political democracy on what is politically fair, just and reasonable. As the hon. Member for Newcastle-under-Lyme (Mr. Golding) said, we are here to argue that out.
It is clear that the situation at the upper end of the income tax scale is as ridiculous as it is at the lower end. Here, too, the case for change is desperately urgent. But when we consider what change can in practice be achieved, we are on much more difficult ground. Unless the Chancellor of the Exchequer raises the threshold by 20 per cent. or rather more—the rate of inflation between April 1975 and April 1976—he will not be reducing taxation at all: he will be increasing it by very substantial amounts.
Some calculations have been given in the newspapers, as well as by my hon. Friends, to show that the allowances will have to be raised, in the case of the single person from £675 to £810, and for the married person from £955 to £1,146. For a child under 11 the allowance will have to be raised from £240 to £288, and for a child over 11 from £305 to £366. If the Chancellor of the Exchequer raises the allowances by less than this, he will have increased taxation.
We have no doubt—I suspect that this view extends to all parties—that there is a desperate need at this time to reduce the levels of taxation. The question is whether the Government, in their determination to imprison themselves and to discard all the choices open to them, have left any room at all in which to achieve the necessary reductions in taxation. Peering into the immediate future for the answer, it is very hard to see that there is any room at all.
The debate on public expenditure showed that public expenditure will not be cut next year but increased. In 1975 prices the increase will be to about £52½ billion. Allowing 10 per cent. for inflation,

the figure will be £58 billion. Looking at the revenue out-turn for last year, a fairly reasonable guess for this year would be about £40 billion. If we add 5 per cent. for the growth in economic activity and another 10 per cent. for inflation, we have £46 billion. That still leaves a gap next year—a public sector borrowing requirement that has to be financed somehow—of £12 billion. That is assuming no reductions in the rate of growth of taxation—no changes in the rates at all.
The first call in terms of responsible public finance is for the Chancellor of the Exchequer to reduce that colossal deficit. He has made undertakings in so many words to the outside world. He has said that there will be some reduction if he can achieve it. If there are any extra resources, this is where the money ought first to go—in reducing the gigantic deficit which otherwise will be as large in 1977 as this year—probably larger in 1977 pounds.
The tax dilemma is that cuts are crucial, but at the same time there is no room for cuts. Indeed, there is little room for reducing the rate of growth of taxation by partly raising thresholds to compensate for the increase in prices. Therefore, when the Chancellor of the Exchequer says, as he did in an interview with the Sun newspaper on the subject of relief for wage earners,
I'll put cash in your pocket",
he is offering something he has not got. He is making an offer of a kind which is irresponsible in relation to his other fiscal undertakings. That statement falls into the same category as his statement in the same interview that we have just "turned the corner" in the British economy. That is the sort of idiotic optimism that we have heard from the Chancellor of the Exchequer in the past—always wrong, always damaging and always misleading in its content and direction.
This is the position the Government face, and we shall watch in the next few weeks to see what on earth they propose to do about it. Desirable and crucial though major tax reductions are, as pointed out by Liberal Members and by Members of my own party, in the lower, the middle and the upper tax ranges, the Labour Government have created a situation in which they have left themselves


no room in which to act responsibly and urgently.
Having said that, I add that not all tax changes are impossible. There may be no room for major and significant tax reductions. That is the fault of the Government. They have made their bed and must lie on it. Nevertheless, as a matter of national survival it is necessary to try to put some steam into business, into investment and into exports. It is possible, without any major revenue implications, without spending or giving back billions of pounds, to make substantial changes in business taxation, and to do something which might—although it is very difficult under this Government—have some confidence-inducing effect.
It should be possible to make reductions in what my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) has called the "political taxes", by which he means taxes which, if they were reduced tomorrow, would have no significant effect on the revenue. These taxes are not imposed for revenue purposes and could be taken away without damage to the economy and without showing fiscal irresponsibility.
I refer to the impossible-to-pay capital transfer tax, which is wrecking so many businesses up and down the land, losing jobs and denying people the chance to do a decent job of work. My right hon. and learned Friend refers, and so do I, to the highest marginal rates of tax. The Labour Weekly is also against them. These are the 98 per cent. and the 83 per cent. taxes which are at world championship levels of absurdity and should certainly go.
Then there is certainly a case for looking at the capital gains tax and its working under high rates of inflation and trying to move towards a tapering of it. A number of other changes in taxation could be made to encourage business investment.
Those on the Liberal Benches, such as the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel), and others on the Labour Benches may say that this is very unfair because it is the people at the broad level, the mass of income earners, who must be helped now and must have the first priority.
Alas, we have to say—I hope that the Treasury Bench will say this very soon—

that the first priority at this difficult time is not to help the mass of people. The first priority, alas, is to enable us to earn, to invest, to export. This means that the first consideration in any tax changes now at this stage, this side of national bankruptcy, must be to assist business investment by changes which will encourage investment and encourage business enterprise. That is the unpleasant but necessary priority to which we have been forced. When these things have been done and we are back from the brink of bankruptcy, we can then turn to the other and more desirable tax reforms.
This is the position into which Government have been trapped. In our view the Government's attempted defence in their amendment is untenable. Their record of fiscal administration, quite aside from the level of tax burdens, is inexcusable. They have blundered on everything they have done, whether it is capital transfer tax, the higher rate of value added tax—which was a nonsense—or the discrimination against small businesses. Even in the case of stock appreciation, where the Government tried to help, they have left firms with an absurd overhang of tax liability which will have to go.
Some of these matters could be put right in the 6th April Budget, but on past performance those who believe that anything of this kind will be done are likely to be disappointed.

6.28 p.m.

Mr. Richard Wainwright: This afternoon the House has responded fully to the spirit of the Liberal motion and the manner in which it was introduced by my hon. Friend the Member for Cornwall, North (Mr. Pardoe). We are gratified that the subject has been discussed throughout the debate from all sides of the House as one lying at the very heart of government itself and not simply as a background for grievances, for specific anomalies and for other complaints. There has also been a very constructive spirit about the greater part of the debate.
This is particularly gratifying to a party which has chosen this subject for only the third of its Supply Days since 1939. I hope that this in itself is an earnest of the fact that, contrary to what some


speakers have said, we believe that, first and last, tax must be settled in this Chamber. None of our proposals for a Royal Commission or for Select Committee procedure with co-opted experts is meant in any way to detract from the total supremacy of this Chamber in settling matters of taxation. I hope that we have demonstrated that this afternoon. It is also gratifying to us that our views on taxation, which first saw the light in modern form as far back as 1962 in the report of a Liberal committee chaired by Professor Wheatcroft, have at last been ventilated on the Floor of the House.
There have been some notable contributions to the debate. If I refer to them briefly, it is only because of the lack of time at my disposal. The hon. Member for St. Albans (Mr. Goodhew) struck a Liberal chord when he pointed out that there is income from investment which is simply deferred pay from work. We go along fully with the idea that the income from a range of savings likely to have been saved out of taxed income over a lifetime before retirement should be treated as ordinary pay for the purposes of tax. It is only when we get on to ranges of unearned income which are plainly the result of speculation or of massive and skilled investment on a huge scale that we invoke a higher rate of tax.
My hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel), as has been acknowledged fully, dealt with the appalling aspects of the poverty trap which have been created because in his Budget nearly a year ago the Chancellor of the Exchequer did not allow any reasonable tolerance for the inflation which was bound to follow during the 12 months after his Budget. I underline the many points made by my hon. Friend by saying that Liberal Members will not tolerate a Budget which does not take account of the fact that, whether we like it or not, there is bound to be a high rate of inflation during the 12 months that we face and that full allowance must be made for it in settling the tax which poor people—those on low pay, pensioners, war widows and so on—have to meet. It is not good enough for the Chancellor simply to take the position as at the beginning of April 1976 and say "Look how I have relieved everyone by

moving up the threshold". The inevitable inflation of the 12 months following on the Budget must be reasonably taken into account.
The hon. Member for Maldon (Mr. Wakeham) made a point, which has recurred in the debate, about the way in which the present rate of income tax and the present threshold severely hamper the attempt to get another successful round of the pay policy—a policy which we Liberals supported from the first without hesitation and which we want to succeed when it has to be renewed in a few months. But Liberals are far from alone in warning that the attempt to get the very difficult next round of a semi-voluntary pay policy will be gravely hampered if the Chancellor of the Exchequer is positively prevented from making considerable tax threshold adjustments.
This point was raised very fully and clearly by the hon. Member for New-castle-under-Lyme (Mr. Golding). The query which his very full analysis of the position put into my mind was how the Chancellor could do it. It is dear that there should be very substantial adjustments in favour of the lower earners. But how this is to be achieved by a Chancellor of the Exchequer who resembles a climber who has made the fatal mistake of stretching himself fully on the rock face and has no give in his muscles I do not know, and neither do the commentators.
The hon. Member for Woolwich, West (Mr. Bottomley), as we have come to expect, revealed his expertise on the tax problems of parents with young children. Naturally, it was music in our ears when he extolled the virtues of a tax credit scheme. I hope that he will accept that, although we cannot respond fully to his invitation to a political merger, we shall be delighted unhesitatingly to combine with any hon. Members who want to press a reasonably constructed tax credit scheme on any Government, even at present.
Mr. hon. Friend the Member for Truro (Mr. Penhaligon), who has the enormous advantage of being considerably younger than some of us on the Liberal Bench, horrified us with the vista of the logical consequences of the present rate of inflation. What he said spoke for itself. But without, I hope, being patronising, I say


that young people should take note of what my hon. Friend told us, because for them, when some of us are dead and gone, the consequences of a persistent high rate of inflation will be very much as he described them.
The hon. Member for Guildford (Mr. Howell) appeared to feel that he had put his finger on what he and his hon. Friends seem always to regard as an inevitable Liberal weakness and felt that our call for a Royal Commission was just a form of words hastily thrown into our motion. I assure him that it is not. To take him and his party at their own word for a moment and to suppose that they will eventually again form a Government, our proposal for a Royal Commission is out of consideration for them. We believe that tax disasters derive in part from the fact that Governments take power having previously been in opposition and find wholly inadequate preparation for the carrying out of their plans once they reach power.
What we should like a Royal Commission to be dealing with is not the here and now and the emegencies of tax as they have been deployed today, but the longer-term problems—the problem of redefining taxable capacity, whether we are to move eventually from what is surely a rather crude business of simply taxing income and certain forms of spending to something very much more refined, and whether we can eventually discover the secret, which so far has remained hidden, of actually using taxation to achieve a real redistribution of wealth. So far, the results of a massive machine of taxation have been only the mouse of a redistribution, and Marks and Spencer have done more in that regard than anything that the Inland Revenue has achieved over the years.

Mr. Peter Rees: Are we right to infer from what the hon. Gentleman has been saying that possibly he and his hon. Friends are in favour of a wealth tax in place of an investment income surcharge?

Mr. Wainwright: That is not a question that I am prepared to pursue in the time available to me. I believe that many of the inbuilt complications of a wealth tax have not yet even been explored, and certainly there would be

problems for a Royal Commisson to clear up there.
There is also the requirement, which looms not very far ahead, to get our tax system into greater harmony with those of other countries and to work towards an international tax system. No one will dispute that these are problems on which a Royal Commission could usefully do a great deal of work before the issue came back, as it must, to Committees of Parliament and eventually to a full debate in this Chamber.
I suggest that today's debate has possibly marked a watershed in the discussion of taxation in this House in that, for the first time in my recollection, we have got away from this tedious, unprofitable and wholly circular business of arguing the incentive and disincentive effects of taxation. I agree with what my hon. Friend the Member for Cornwall, North said about the unprofitability of that. Evidently, others have arrived at the same conclusion. Perhaps it is a sign that we are now being governed rather more by people who are informed more by the humanities and less by the sociologies.
What matters really is how far the taxpaying citizen is satisfied with the benefits that he feels he gets from the PAYE that he suffers. The fact is that over the centuries many British taxpayers have been profoundly dissatisfied, and Governments have been forced to take notice of the dissatisfaction. We have arrived at a similar stage today.
John Hampden was dissatisfied because he felt that paying large sums in ship money would not produce much benefit for people living in Buckinghamshire, and we all know what flowed from that dissatisfaction. The Cornish boroughs rebelled against paying taxes for the raising of arms to defend the Scottish border. The Government would do well to note that these days, thanks to television and many other factors, there are thousands of Hampdens boiling up to something like the same indignant spirit that John Hampden so splendidly showed.
When these people look at their pay slips and gaze out of their twelfth-storey flat in some municipal Bantustan, they say "I did not ask for electric under-floor heating which I can switch on only when I have won the pools; I did not ask for a flat full of Parker Morris


closets so that the whole family can go at the same time; my wife did not ask for the Minister of Sport to beckon her to his latest lacrosse facility in the park." Such a person sees the whole thing as being out of control. He believes that he is being mulcted and that his freedom of choice is being eroded for reasons he does not support.
There is a further enormously important potential explosion on the way, because people are now beginning to realise, thanks again to television and perhaps to debates in this House, that a lot of what they pay is now being used to finance outrageous salaries in the public service. Typists gaze mournfully at the deductions on their pay sheet, thinking that a lot of the money goes to pay the girl next door whose speed is slower than theirs and who complains that she is occupied for only two days a week, but who is earning 50 per cent. more than her counterpart in a private office. These are the ingredients of revolt, and it is because we sense that over-taxation can dissolve society that we have invited the House to discuss the matter this evening.
The consequences of raging inflation are particularly manifest in taxation. There is an urgent need—and I hope that we shall have some declaration of principle on this from the Financial Secretary tonight—at least to catch up with the years that the locusts have eaten. For instance, the so-called child—that is, in Inland Revenue language, anybody up to the age of 80 who is still under the care of parents and is undergoing full-time education—is allowed to earn only £115 a year before the parents' child allowance starts to be docked. That allowance was fixed in this House 13 years ago and therefore it ought to be at least three times that amount. These points are noted by taxpayers outside and reflect very severely on the reputation and esteem in which this House is held.
I come in a closing moment—for that is all it deserves—to the Government amendment. I have never supposed that Ministers were such a collection of Little Jack Homers saying what good boys they are with a progressive and fair trend in taxation. I hope that the Financial Secretary, using his Lancashire good sense, will explain the Government's idea

of progress. It is not at the moment clear to me.
I can give one example to support my contention. The rate of tax which is paid by the taxpayer who hits the taxable belt of income for the first time is 35 per cent. In wiser times, people were introduced to income tax at about 16 per cent., which was levied on their first £100 of taxable income. That was followed by an intermediate rate of 24 per cent. and only after that was the clutch let out completely and the taxpayer required to pay the full rate of tax. Few things can be more provocative than subjecting the citizen to the full normal rate of tax the moment his income becomes taxable. Yet, after perpetuating that situation, the Government have the cheek to say that they are administering an increasingly progressive and fair system of taxation.
I invite the House to reject the Government amendment and to support the motion.

6.45 p.m.

The Financial Secretary to the Treasury (Mr. Robert Sheldon): The House will not expect me to give any details of the kind that some questions have been seeking and upon which a number of comments have been made. The Budget is now only just over two weeks away. However, I welcome the opportunity to deal in general terms with a number of serious points, including those raised from the Liberal Benches. I take note of the comment by the hon. Member for Truro (Mr. Penhaligon), who said that a good Liberal was one who understood both sides of the argument and so could not make up his mind. I hope that what I have to say will produce that kind of indecision on this occasion.
I note, too, as the hon. Member for Colne Valley (Mr. Wainwright) said in his most engaging way, that it is a long time since the Liberals had Supply Days as frequently as they are having them at present. The Government are entitled to some credit for that situation.

Mr. John Nott: They have had three.

Mr. Sheldon: I note what was said by the hon. Member for St. Ives (Mr. Nott), who has a peculiar relationship with the hon. Member for Cornwall, North (Mr.


Pardoe), whose subleties I have not been fully able to understand. Certain people are still very innocent in these matters. By "relationship" I meant the constituency relationship which exists where their two boundaries meet.

Mr. Nott: They do not.

Mr. Sheldon: I am obliged to the hon. Member for that information.
It is my responsibility to deal with the arguments that have been put forward by the Liberals. The hon. Member for Cornwall, North said that as regards increased taxation there was not a great deal to choose between one Government and another. He made a point that I have used at after-dinner speeches in the City of London, which is that the Conservatives sound as though they wish to cut taxation and that the Socialists, or at least some of them sound as though they wish to increase it. The result is not all that different in either case, for a number of very sound reasons.
Perhaps the most important reason is that the Conservatives are faced with an ineluctable choice about rising expenditure, just as a Labour Government are, but the Labour Government try to ensure a greater degree of fairness and a fairer distribution of income. The problem of public expenditure is one which faces both the Government and the House. In Adjournment debates and on other opportunities hon. Members are forced by constituency pressures to ask for additional public expenditure to meet legitimate demands. We know that the pressures on Members to reduce taxation exists, but they are rather more diffuse than the pressures to increase public expenditure, which are direct and which, by their very nature, tend to be similar. The pressures which historically will always be expressed in this House are not so well resolved at the present time.
The hon. Member for Cornwall, North propounded one or two possible solutions to these problems. First, he advanced the important argument, which we have debated a number of times, that we need a certain amount of indexation written into some of the provisions for direct taxation in particular. He said that the Government could raise extra sums of revenue beyond that which Parliament has authorised because of the increase in inflation during

the subsequent fiscal year. I take that point, but all these matters can be considered in the light of the Budget judgment.
If the judgment is that a higher or lower rate of inflation is expected, that will have its impact on the levels of allowances, and those arguments can be deployed then as well. There is no lack of opportunity for many debates of that kind in the future. There will be a number of days' debate on the Budget, followed by debate on the Finance Bill in Committee here and upstairs, as well as on Report and Third Reading.
Of course I understand that the hon. Gentleman also wants us to consider these important points in the formulation of the Budget. I can assure him that a number of decisions have still to be taken on the Budget, but I cannot say much more than that.
The hon. Gentleman mentioned the problems of the failure to tax benefits, which he said led to a certain loss of incentive by those people who are working and paying high levels of tax. Taxing short-term benefits is very difficult. By the very nature of the benefits, the person concerned could well be back at work or no longer eligible for benefits by the time the administrative machine had identified him. It was for precisely these reasons that benefits were excluded from taxation so many years ago. Lower rate bands of taxation, which the hon. Gentleman's own tax credit scheme would not permit, present similar difficulties.
When the public sector borrowing requirement is occupying so much of our time, there is some merit in the point made by the hon. Member for Guildford (Mr. Howell) that reductions in taxation should be viewed in conjunction with the public sector borrowing requirement, which must be causing concern to the whole House. The hon. Member for Cornwall, North and others asked about the possibility of considering together matters of public expenditure and taxation. They rightly pointed out the interaction between public expenditure and levels of taxation. I am a past chairman of the General Sub-Committee of the Expenditure Committee, and my comments on the matter before I took office are on record. I was strongly in favour of taking them together, but I understand the great problems involved.
The Government recognise the importance of bringing about better appreciation of the taxation consequences of public expenditure. In the White Paper this theme has been very well developed. As the Treasury has said in its reply to the Expenditure Committee, we shall give further study to the practices of other countries. This will naturally take time, but in due course we shall be reporting some of the findings to the House.
I should next like to say something about the effect of taxation on incentives. The hon. Member for St. Albans (Mr. Goodhew) argued that this was still an important matter and the hon. Member for Maldon (Mr. Wakeham) devoted most of his speech to it. I agree with the hon. Member for Colne Valley who said that some of these arguments are occupying the attention of the House rather less than they used to do. We are all grateful for that. However, the arguments are still being advanced and it is only fair that I should try to rebut some of them.
Sometimes it is said that people do not take positions of greater responsibility just because they would find themselves paying a higher level of income tax. However, there are two answers to that argument. The first is the change made to surtax in 1961, when the threshold was raised from £2,000 a year to £5,000, and the other is the large income tax reduction announced in his 1970 autumn Budget by the then Chancellor.
Both those decisions were said to have been made purely on the ground that they would give incentives to people, who would release their energies to ensure the economic advance of this country. Both failed to produce the results claimed for them. Despite the passage of years, nobody can identify in the figures for economic growth any

ripple, any hiccup, due to those changes. Therefore, I hope that we shall not hear many more such arguments.

Mr. Peter Rees: Will the Minister admit that the country was not given more than two years to enjoy the lowering of the tax rates introduced by Lord Barber?

Mr. Sheldon: If the hon. and learned Gentleman thinks that giving money in that way was of particular advantage to our manufacturing strength, all I can say is that not only has he seriously misunderstood the nature of incentives, but he has failed to understand what motivates the people concerned.
In 1970 income tax was reduced. The public sector borrowing requirement then stood at £802 million. The following year the higher rate thresholds—the old surtax levels—were increased, and the public sector borrowing requirement rose to £1,016 million. Then we had the unified tax structure, which gave advantage to those with the pleasure of enjoying high levels of investment income, and the public sector borrowing requirement increased to more than £4,000 million. There was a direct relationship between the Chancellor's reduction in taxation and the increase in borrowing, which paid for it. The country paid a great deal for those reductions in income tax, which produced the highest rates of inflation it has ever known. They were incurred in the interests of reducing taxation.
Changes of that kind we can do without. When the Chancellor rises to make his Budget Statement on 6th April, we shall see the fair and progressive taxation that the amendment talks about and see it brought properly into full action.

Question put, That the amendment be made:—

The House divided: Ayes 279, Noes 253.

Division No. 95.
AYES
7.0 p.m.


Abs, Leo
Bean, R. E.
Brown, Ronald (Hackney S)


Allaun, Frank
Benn, Rt Hon Anthony Wedgwood
Buchan, Norman


Anderson, Donald
Bennett, Andrew (Stockport N)
Buchanan, Richard


Archer, Peter
Bidwell, Sydney
Butler, Mrs Joyce (Wood Green)


Armstrong, Ernest
Bishop, E. S.
Callaghan, Jim (Middleton & P)


Ashley, Jack
Boardman, H.
Canavan, Dennis


Ashton, Joe
Booth, Rt Hon Albert
Cant, R. B.


Atkins, Ronald (Preston N)
Bottomley, Rt Hon Arthur
Carmichael, Neil


Atkinson, Norman
Boyden, James (Bish Auck)
Carter, Ray


Bagier, Gordon A. T.
Bradley, Tom
Carter-Jones, Lewis


Barnett, Guy (Greenwich)
Bray, Dr Jeremy
Cartwright, John


Barnett, Rt Hon Joel (Heywood)
Brown, Hugh D. (Provan)
Castle, Rt Hon Barbara


Bates, Alf
Brown, Robert C (Newcastle W)
Clemitson, Ivor




Cocks, Michael (Bristol S)
Jackson, Miss Margaret (Lincoln)
Perry, Ernest


Coleman, Donald
Janner, Greville
Phipps, Dr Colin


Colquhoun, Ms Maureen
Jay, Rt Hon Douglas
Prentice, Rt Hon Reg


Concannon, J. D.
Jeger, Mrs Lena
Prescott, John


Conlan, Bernard
Jenkins, Hugh (Putney)
Price, C. (Lewisham W)


Cook, Robin F. (Edin C)
Jenkins, Rt Hon Roy (Stechford)
Price, William (Rugby)


Corbett, Robin
John, Brynmor
Radice, Giles


Cox, Thomas (Tooting)
Johnson, James (Hull West)
Richardson, Miss Jo


Craigen, J. M. (Maryhill)
Johnson, Walter (Derby S)
Roberts, Albert (Normanton)


Crawshaw, Richard
Jones, Alec (Rhondda)
Roberts, Gwilym (Cannock)


Crosland, Rt Hon Anthony
Jones, Barry (East Flint)
Robertson, John (Paisley)


Cryer, Bob
Jones, Dan (Burnley)
Robinson, Geoffrey


Cunningham, G. (Islington S)
Judd, Frank
Roderick, Caerwyn


Cunningham, Dr J. (Whiteh)
Kaufman, Gerald
Rodgers, George (Chorley)


Davidson, Arthur
Kelley, Richard
Rodgers, William (Stockton)


Davies, Bryan (Enfield N)
Kerr, Russell
Rose, Paul B.


Davies, Denzil (Llanelli)
Kilroy-Silk, Robert
Ross, Rt Hon W. (Kilmarnock)


Davis, Clinton (Hackney C)
Kinnock, Neil
Rowlands, Ted


Deakins, Eric
Lambie, David
Sandelson, Neville


Dean, Joseph (Leeds West)
Lamborn, Harry
Sedgemore, Brian


Delargy, Hugh
Lamond, James
Selby, Harry


Dell, Rt Hon Edmund
Latham, Arthur (Paddington)
Shaw, Arnold (llford South)


Doig, Peter
Leadbitter, Ted
Sheldon, Robert (Ashton-u-Lyne)


Dormand, J. D.
Lestor, Miss Joan (Eton & Slough)
Shore, Rt Hon Peter


Douglas-Mann, Bruce
Lewis, Ron (Carlisle)
Short, Rt Hon E. (Newcastle C)


Duffy, A. E. P.
Lipton, Marcus
Silkin, Rt Hon John (Deptford)


Dunnett, Jack
Litterick, Tom
Silkin, Rt Hon S. C. (Dulwich)


Eadie, Alex
Loyden, Eddie
Silverman, Julius


Edge, Geoff
Luard, Evan
Skinner, Dennis


Edwards, Robert (Wolv SE)
Lyon, Alexander (York)
Small, William


Ellis, John (Brigg & Scun)
Lyons, Edward (Bradford W)
Smith, John (N Lanarkshire)


Ellis, Tom (Wrexham)
Mabon, Dr J. Dickson
Snape, Peter


English, Michael
McCartney, Hugh
Spearing, Nigel


Ennals, David
McElhone, Frank
Spriggs, Leslie


Evan, Fred (Caerphilly)
McGuire, Michael (Ince)
Stallard, A. W.


Evans, loan (Aberdare)
Mackenzie, Gregor
Stewart, Rt Hon M. (Fulham)


Ewing, Harry (Stirling)
Mackintosh, John P.
Stoddart, David


Faulds, Andrew
Maclennan, Robert
Stonehouse, Rt Hon John


Fernyhough, Rt Hon E.
McMillan, Tom (Glasgow C)
Stott, Roger


Fitch, Alan (Wigan)
McNamara, Kevin
Strang, Gavin


Fitt, Gerard (Belfast W)
Madden, Max
Strauss, Rt Hon G. R.


Fletcher, Ted (Darlington)
Mallalieu, J. P. W.
Summerskill, Hon Dr Shirley


Foot, Rt Hon Michael
Marks, Kenneth
Swain, Thomas


Ford, Ben
Marquand, David
Taylor, Mrs Ann (Bolton W)


Forrester, John
Marshall, Dr Edmund (Goole)
Thomas, Jeffrey (Abertillery)


Fowler, Gerald (The Wrekin)
Marshall, Jim (Leicester S)
Thomas, Mike (Newcastle E)


Fraser, John (Lambeth, N'w'd)
Mason, Rt Hon Roy
Thomas, Ron (Bristol NW)


Freeson, Reginald
Maynard, Miss Joan
Tierney, Sydney


Garrett, John (Norwich S)
Meacher, Michael
Tinn, James


Garrett, W. E. (Wallsend)
Mellish, Rt Hon Robert
Tomlinson, John


George, Bruce
Mendelson, John
Torney, Tom


Gilbert, Dr John
Mikardo, Ian
Tuck, Raphael


Ginsburg, David
Millan, Bruce
Urwin, T. W.


Golding, John
Miller, Dr M. S. (E Kilbride)
Varley, Rt Hon Eric G.


Gould, Bryan
Miller, Mrs Millie (llford N)
Wainwright, Edwin (Dearne V)


Gourlay, Harry
Mitchell, R. C. (Soton, Itchen)
Walden, Brian (B'ham, L'dyw'd)


Graham, Ted
Molloy, William
Walker, Harold (Doncaster)


Grant, George (Morpeth)
Moonman, Eric
Ward, Michael


Grant, John (Islington C)
Morris, Alfred (Wythenshawe)
Watkins, David


Grocott, Bruce
Morris, Charles R. (Openshaw)
Weetch, Ken


Hamilton, W. W. (Central Fife)
Morris, Rt Hon J. (Aberavon)
Weitzman, David


Hardy, Peter
Moyle, Roland
Wellbeloved, James


Harrison, Walter (Wakefield)
Mulley, Rt Hon Frederick
White, Frank R. (Bury)


Hart, Rt Hon Judith
Murray, Rt Hon Ronald King
White, James (Pollok)


Hattersley, Rt Hon Roy
Newens, Stanley
Whitehead, Phillip


Hayman, Mrs Helene
Noble, Mike
Whitlock, William


Healey, Rt Hon Denis
Oakes, Gordon
Willey, Rt Hon Frederick


Heffer, Eric S.
Ogden, Eric
Williams, Alan (Swansea W)


Hooley, Frank
O'Halloran, Michael
Williams, Alan Lee (Hornch'ch)


Horam, John
O'Malley, Rt Hon Brian
Williams, Rt Hon Shirley (Hertford)


Howell, Rt Hon Denis
Orbach, Maurice
Williams, Sir Thomas


Hoyle, Doug (Nelson)
Orme, Rt Hon Stanley
Wilson, Alexander (Hamilton)


Huckfield, Lea
Ovenden, John
Wilson, William (Coventry SE)


Hughes, Rt Hon C. (Anglesey)
Padley, Walter
Wise, Mrs Audrey




Woodall, Alec


Hughes, Mark (Durham)
Palmer, Arthur
Woof, Robert


Hughes, Robert (Aberdeen N)
Park, George
Wrigglesworth Ian


Hughes, Roy (Newport)
Parker, John
Young David (Bolton E)


Hunter, Adam
Parry, Robert



Irvine, Rt Hon Sir A. (Edge Hill)
Pavitt, Laurie
TELLERS FOR THE AYES:


Irving, Rt Hon S. (Dartford)
Peart, Rt Hon Fred
Mr. Joseph Harper and


Jackson, Colin (Brighouse)
Pendry, Tom
Mr. James Hamilton.








NOES



Aitken, Jonathan
Gray, Hamish
Morrison, Hon Peter (Chester)


Alison, Michael
Griffiths, Eldon
Mudd, David


Amery, Rt Hon Julian
Grimond, Rt Hon J.
Neave, Alrey


Arnold, Tom
Grist, Ian
Nelson, Anthony


Atkins, Rt Hon H. (Spelthorne)
Grylls, Michael
Neubert, Michael


Baker, Kenneth
Hall, Sir John
Newton, Tony


Bank, Robert
Hamilton, Michael (Salisbury)
Normanton, Tom


Beith, A. J.
Hannam, John
Nott, John


Bell, Ronald
Harrison, Col Sir Harwood (Eye)
Onslow, Cranley


Bennett, Dr Reginald (Fareham)
Hastings, Stephen
Page, John (Harrow West)


Benyon, W.
Havers, Sir Michael
Page, Rt Hon R. Graham (Crosby)


Berry, Hon Anthony
Hawkins, Paul
Paisley, Rev Ian


Bitten, John
Heath, Rt Hon Edward
Parkinson, Cecil


Biggs-Davison, John
Heseltine, Michael
Pattie, Geoffrey


Blaker, Peter
Hicks, Robert
Penhaligon, David


Body, Richard
Higgins, Terence L.
Percival, Ian


Boscawen, Hon Robert
Holland, Philip
Pink, R. Bonner


Bottomley, Peter
Hordern, Peter
Price, David (Eastleigh)


Bowden, A. (Brighton, Kemptown)
Howe, Rt Hon Sir Geoffrey
Prior, Rt Hon James


Boyson, Dr Rhodes (Brent)
Howell, David (Guildford)
Pym, Rt Hon Francis


Braine, Sir Bernard
Howells, Geraint (Cardigan)
Raison, Timothy


Brocklebank-Fowler, C.
Hunt, David (Wirral)
Rathbone, Tim


Brotherton, Michael
Hunt, John
Rawlinson, Rt Hon Sir Peter


Brown, Sir Edward (Bath)
Hurd, Douglas
Rees, Peter (Dover & Deal)


Bryan, Sir Paul
Hutchison, Michael Clark
Rees-Davies, W. R.


Buchanan-Smith, Alick
Irving, Charles (Cheltenham)
Ronton, Rt Hon Sir D. (Hunts)


Buck, Antony
James, David
Renton, Tim (Mid-Sussex)


Budgen, Nick
Jenkin, Rt Hon P. (Wanst'd & W'df'd)
Ridley, Hon Nicholas


Bulmer, Esmond
Jessel, Toby
Ridsdale, Julian


Burden, F. A.
Johnson Smith, G. (E Grinstead)
Rifkind, Malcolm


Carlisle, Mark
Johnston, Russell (Inverness)
Rippon, Rt Hon Geoffrey


Chalker, Mrs Lynda
Jopling, Michael
Roberts, Michael (Cardiff NW)


Clark, Alan (Plymouth, Sutton)
Joseph, Rt Hon Sir Keith
Roberts, Wyn (Conway)


Clark, William (Croydon S)
Kaberry, Sir Donald
Rodgers, Sir John (Sevenoaks)


Clarke, Kenneth (Rushcliffe)
Kellett-Bowman, Mrs Elaine
Ross, Stephen (Isle of Wight)


Cockcroft, John
Kershaw, Anthony
Rossi, Hugh (Hornsey)


Cooke, Robert (Bristol W)
Kilfedder, James
Rost, Peter (SE Derbyshire)


Cormack, Patrick
Kimball, Marcus
Royle, Sir Anthony


Corrie, John
King, Evelyn (South Dorset)
Sainsbury, Tim


Costain, A. P.
King, Tom (Bridgwater)
St. John-Stevas, Norman


Craig, Rt Hon W. (Belfast E)
Kitson, Sir Timothy
Scott, Nicholas


Critchley, Julian
Knight, Mrs Jill
Shaw, Michael (Scarborough)


Crouch, David
Knox, David
Shelton, William (Streatham)


Crowder, F. P.
Lamont, Norman
Shepherd, Colin


Davies, Rt Hon J. (Knutsford)
Lane, David
Shersby, Michael


Dean, Paul (N Somerset)
Langford-Holt, Sir John
Silvester, Fred


Dodsworth, Geoffrey
Latham, Michael (Melton)
Sims, Roger


Drayson, Burnaby
Lawrence, Ivan
Sinclair, Sir George


du Cann, Rt Hon Edward
Lawson, Nigel
Skeet, T. H. H.


Durant, Tony
Le Marchant, Spencer
Smith, Dudley (Warwick)


Dykes, Hugh
Lester, Jim (Beeston)
Speed, Keith


Eden, Rt Hon Sir John
Lewis, Kenneth (Rutland)
Spence, John


Edwards, Nicholas (Pembroke)
Lloyd, Ian
Spicer, Michael (S Worcester)


Elliott, Sir William
Loveridge, John
Sproat, lain


Emery, Peter
Luce, Richard
Stainton, Keith


Evans, Gwyntor (Carmarthen)
McAdden, Sir Stephen
Stanbrook, Ivor


Eyre, Reginald
McCrindle, Robert
Stanley, John


Fairgrieve, Russell
Macfarlane, Neil
Steel, David (Roxburgh)


Fell, Anthony
MacGregor, John
Stewart, Ian (Hitchin)


Finsberg, Geoffrey
Macmillan, Rt Hon M. (Farnham)
Stokes, John


Fisher, Sir Nigel
McNair-Wilson, M. (Newbury)
Stradling Thomas, J.


Fletcher, Alex (Edinburgh N)
McNair-Wilson, P. (New Forest)
Taylor, R. (Croydon NW)


Fletcher-Cooke, Charles
Madel, David
Tebbit, Norman


Fookes, Miss Janet
Marshall, Michael (Arundel)
Temple-Morris, Peter


Forman, Nigel
Marten, Neil
Thomas, Rt Hon P. (Hendon S)


Fowler, Norman (Sutton C'f'd)
Mates, Michael
Thompson, George


Fox, Marcus
Maude, Angus
Thorpe, Rt Hon Jeremy (N Devon)


Fraser, Rt Hon H. (Stafford & St)
Maudling. Rt Hon Reginald
Townsend, Cyril D.


Fry, Peter
Mawby, Ray
Trotter, Neville


Gardiner, George (Reigate)
Maxwell-Hyslop, Robin
Tugendhat, Christopher


Gardner, Edward (S Fylde)
Meyer, Sir Anthony
van Straubenzee, W. R.


Gilmour, Rt Hon Ian (Chesham)
Miller, Hal (Bromsgrove)
Vaughan, Dr Gerard


Gilmour, Sir John (East Fife)
Mills. Peter
Viggers, Peter


Glyn, Dr Alan
Miscampbell, Norman
Wainwright, Richard (Colne V)


Godber, Rt Hon Joseph
Mitchell, David (Basingstoke)
Wakeham, John


Goodhart, Philip
Moate, Roger
Walker-Smith, Rt Hon Sir Derek


Goodhew, Victor
Montgomery, Fergus
Wall, Patrick


Goodlad, Alastair
Moore, John (Croydon C)
Walters, Dennis


Gorst, John
More, Jasper (Ludlow)
Warren, Kenneth


Gow, Ian (Eastbourne)
Morgan, Geraint
Weatherill, Bernard


Gower, Sir Raymond (Barry)
Morris, Michael (Northampton S)
Wells, John


Grant, Anthony (Harrow C)
Morrison, Charles (Devizes)
Whitelaw, Rt Hon William







Wiggin, Jerry
Wood, Rt Hon Richard
TELLERS FOR THE NOES:


Wilton, Gordon (Dundee E)
Young, Sir G. (Ealing, Acton)
Mr. Clement Freud and


Winterton, Nicholas
Younger, Hon George
Mr. John Pardoe.

Question accordingly agreed to.

Main Question, as amended, put and agreed to.

Resolved,
That this House believes in the need for a fair and progressive tax system, and endorses the Government's masures in that direction.

NORTHERN IRELAND (DEFENCE EXPENDITURE)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. John Ellis.]

7.13 p.m.

Mr. James Molyneaux: I want to begin with what may be the only compliment that I can pay. Perhaps it will be the only compliment of the entire debate. It is to express our appreciation of the care taken by the Service Ministers to ensure that we were in early possession of the news of their decision and, secondly, to express our appreciation of their joint visit to Northern Ireland to meet in person those affected by that decision. Although they went as bearers of said tidings, at least they displayed humanity in their treatment of those for whom the news meant gloom and disaster.
I should like to remind the House that we on the Ulster Bench were elected on a pledge to support firm measures to control the rise in public expenditure, a rise which we believed and still believe to be the major cause of inflation. We stand by that pledge. In the case that we present this evening, we do not in any way conflict with that stated position. Nor shall we put ourselves in the false position of demanding economies in general and expenditure in particular, for our case rests on far more solid ground. We hope to show and establish that, far from effecting savings, the proposed withdrawal of these defence tasks from Northern Ireland will result in greater total Government outlay.
I do not know how deeply the Secretary of State for Northern Ireland and his ministerial team have been involved in these decisions. Whatever the outcome, a measure of responsibility rests upon them to help to find positions for

those displaced by the closures. They can be assured of our co-operation in this matter, but more realism will be required than has so far been shown by the Stormont Departments.
I should like to give an example. On Saturday I approached the head of a firm, Hugh Montgomery and Son of Glengormly, to ask whether he might be prepared to offer jobs to men from Adergrove and Antrim whose skills would be useful in his expanding business, which he is in process of linking to a continental consortium. His reply was "Yes", but, said he "Read this" He handed me a letter conveying the news of the rejection of a planning appeal, which may result in the dismissal of his existing staff and has certainly killed stone dead all prospect of proceeding with his proposed expansion.
All that he was asking for was for his firm to be allowed to stay where it is, as, indeed, other neighbouring concerns have been allowed to remain where they started their business. However, because some obscure planner drew a line on a map some nine years ago, my constituent is expected to uproot this flourishing business of his and to move it a matter of a mere 300 yards along the other side of the road. I hope that the Minister of State, who is renowned for his common sense, will see that common sense prevails in this particular case.
There is a difference of opinion on this Bench as to whether these proposed cuts represent part of an economic withdrawal from Northern Ireland. However charitable some of us may feel towards the Government, we must be forthright and say that the Government's own past propaganda is against them, because when the Convention was sitting the suggestion was continually put about that if only we would agree to a power-sharing Government and structure at Stormont, all would be well with the economic situation in Northern Ireland. That, of course, immediately prompted the question of what could be done that was not then being done by Her Majesty's Government.
I am afraid that that question has never really been answered squarely. It is a vital question and it is vital that an


answer be given. Clearly, Stormont could have had no standing in the present matter of the defence cuts, but, because of the former attitude of the Government, they will now have to prove beyond a shadow of doubt that there is not even a trace of political motivation in the present decision.
With regard to the Royal Naval Armament Depot in Antrim, the Under-Secretary of State for Defence for the Royal Navy has assured us that he has looked very carefully into the possibilities of putting other work into Antrim, but so far without success. We are told that after 1st April 1978 the remaining overhaul work will be absorbed at Plymouth and that this will necessitate about 90 additional jobs in the Plymouth area. I understand that at present on the strength at the Antrim depot there are about 25 coppersmiths, but I am also told—I am open to correction—that at Plymouth the number is perhaps one or two. I should like the Under-Secretary to clear up that.
Although we welcome the assurance that first priority will be given to applicants from Antrim who are willing to move to Plymouth, we cannot escape the conclusion that at least 90 specialised jobs are being removed from Northern Ireland. No doubt this can be countered by the suggestion that those 90 jobs will be of a temporary nature. If that be so, does it make sense to invite workers from Antrim to transfer to Plymouth for what is bound to be a relatively short period?
I have noted the Minister's view that the reduced volume of work would not justify the retention of the Antrim depot, but may I put two suggestions to him? First, as the Mk 8 torpedo overhauls will probably taper off completely in about 1980, is it not possible to delay the closure of Antrim by a further two years? Secondly, is it not possible to reduce the overheads at the Antrim depot by sharing its facilities, and therefore the overheads, with other defence units?
Royal Air Force, Sydenham, is situated in the constituency of my right hon. Friend the Member for Belfast, East (Mr. Craig). If he should catch the eye of the Chair, I have no doubt that he will deploy the case against the decision

as it affects that establishment, because this is the second blow dealt to that establishment in the past few years. Following as it does the decision to close the Rolls-Royce factory at Dundonald and coupled with the disastrous news of the closure of 23 MU at Aldergrove, one can understand the feeling of utter despair which has seized the work force at Sydenham.
The Sydenham closure would be a little more bearable if 23 MU Aldergrove were retained. Co-operation between the two establishments has in recent years been very good. An example was when it was decided to merge the apprentice training schemes of Aldergrove and Sydenham. A report on the combined effort issued last autumn must now make very bitter reading for the young men who staked all on a career with the Royal Air Force. Referring to the joint training scheme it said:
It is from these young men that the future management of units like 23 MU and RAF Sydenham will be drawn.
The Under-Secretary of State for the Royal Air Force has given me an undertaking, for which I am grateful, that he will look carefully at the apprentice courses to see whether it will be desirable to extend the scope to equip the trainees to take advantage of wider opportunities in engineering.
I turn to what is in many ways the central problem—that of No. 23 Maintenance Unit, Aldergrove. For me this is more than a mere constituency interest. The maintenance unit was built on my grandfather's farm, which in the ordinary course of events I should have inherited. Most of the staff employed there, and now likely to be unemployed, are not just constituents but neighbours and in many cases personal friends.
I suppose that over the past few years we have all lived with the knowledge, or perhaps the fear, that when the Phantom aircraft came to the end of its useful life, it might be very difficult for 23 MU to acquire a share in servicing and maintaining later types of aircraft, which in any case would probably be greatly restricted in number. But never, even in our worst nightmares, did we imagine that all the skill and techniques which had been acquired and built up at Aldergrove to process this notoriously


difficult and complex aircraft would be totally wasted and destroyed.
This brings me to the question of the economics of the proposal to remove the Phantom from Northern Ireland and place it at St. Athan. First, what will be the cost of training personnel for the art of coping with the complicated American Phantom aircraft, and how long will that process take? Secondly, who will service and repair the intricate flight control system of the Phantoms? I understand that in the past St. Athan has coped with aircraft like the Vulcan, but in those cases the avionic equipment was removed and sent back to the makers or to other specialised firms. Will such a time-wasting, expensive procedure be followed in the case of the Phantom, bearing in mind that all of that process could be completed, and has in the past been completed, on the one unit more or less under the one roof at Aldergrove?
The Minister probably knows that 23 MU has approximately 500,000 square feet available for aircraft servicing. It has a modern surface finish hanger of 43,000 square feet which, I understand, is one of only two in the whole of the United Kingdom. Are we certain that this kind of hanger space will be available at St. Athan?
If we assume that at any given time about 25 MRCAs will be needing major servicing at St. Athan and probably at the same time 10 Phantoms and possibly four Buccaneer aircraft, is there any assurance that this number of aircraft could be floor-loaded by St. Athan? If not, what will be the cost of providing the additional hanger space? Where will the personnel be found at St. Athan? Again, what will be the cost?
Even accepting that it is desirable to retain the service and civilian mix which we presently have at St. Athan, how does one make sense of the economics of the present proposal, which means paying a Royal Air Force junior technician £4,745 per annum for doing exactly the same work as a civilian craftsman at Aldergrove who is paid £3,696—a difference of over £1,000 per man? On the question of overall costs, I suppose the annual cost of 23 MU would be just under £5 million, rather less than the cost of two Phantom aircraft, but we should be very

foolish indeed if we were to imagine that the closure of the maintenance unit would save anything like that amount.
On two occasions I have been privileged to be allowed to inspect the computer system which controls the entire operations at the maintenance unit at Aldergrove. It controls the planning, the progress of aircraft servicing, and the monitoring of unit costs. This complicated process which was built up at Aldergrove made that unit one of the most effective, if not the most effective unit, from the point of view of cost in the whole of the Royal Air Force. How long will it take to establish such a system at St. Athan, bearing in mind that there will be the complication of coping with two entirely different sophisticated first-line Royal Air Force aircraft at one and the same time? Again, what is the cost?
I understand that there is also a very large question mark over the suitability of the runways at St. Athan. Again, will there be considerable delay before the airfield can accept either the Phantom or the MRCA? Most important of all, we must question the wisdom of servicing these two front-line aircraft at one unit, because in a war situation the nation might pay very dearly for this experiment in centralisation. There might be justification for taking such a strategic risk in centralisation if large savings were likely to be achieved, but I must warn the Secretary of State that the savings may exist only on paper and the reality may be very different.
In fairness to the Ministers, I should give reasons for my distrust of the judgment of those who plan and project on their behalf. I cannot do better than to take another Aldergrove example. In 1973, when the A26 was closed to safeguard aircraft using the north-south runway, I was assured by the previous Administration that the alternative route, the Crosshill Road, would be reconstructed and resurfaced to replace the closed route. On 25th April 1975 the Under-Secretary of State for Northern Ireland wrote to me to explain that the Crosshill Road was being improved to accommodate traffic in the area and that the work would be completed by the end of May. The Minister and his advisers were perhaps a little optimistic, because the work is only now being completed. The last 100 yards or so are now being made ready.
The Secretary of State for Northern Ireland wrote to me last Friday, 19th March 1976, to tell me that the security forces had been giving further thought to improving the security of the military complex at Aldergrove. He wrote:
As you will know, the Cosshill Road runs through it"—
that, is the military complex—
so it is to be closed.
I concede that it is inconsiderate of the Crosshill Road to run through the complex. I make that concession despite the fact that the road existed some 260 years before the military complex arrived on the scene.
Surely we are entitled to ask who put the complex there in the first place. It might be said that it was sited in the good old days before car bombs and other such devices, but that is not so. The Alexandra Barracks and the consequent civilian housing and married quarters were installed to accommodate the Royal Corps of Military Police which was brought in to cope with the present security situation in Northern Ireland.
No one but a madman would have placed living quarters within literally a stone's throw of a public road, yet that blunder was made. It was made by the same people in the Ministry of Defence who have now decreed that one road having been closed and an enormous amount of public money having been spent on its replacement, the road should be closed with all the attendant waste of public money.
With great respect, I ask the Secretary of State for Defence and his Ministers to be wise in their own interests, to do their own sums and to think long and carefully before they sign the death warrant for these defence establishments for reasons of economy, which I am afraid is the ground most suspect of all.

7.34 p.m.

The Under-Secretary of State for Defence for the Royal Air Force (Mr. Brynmor John): It is right that hon. Members should draw attention to the consequences of some of the decisions which we have had to announce regarding Northern Ireland in the immediate aftermath of the publication of the White Paper. I say straight away that they

were decisions which gave no one great pleasure. As I think the hon. Member for Antrim, South (Mr. Molyneaux) conceded, it is an extremely unpleasant task to have to announce redundancies affecting large numbers of people. My fellow Under-Secretary of State, the hon. Member for Portsmouth, North (Mr. Judd), and I found last Wednesday a very sad day.
It will be no part of my submissions to deny the effects that our decisions will have on the workers concerned, but it is right to point out that we did not announce immediate closure of the units. In fact, the closure date is 1st April 1978. I hope to be able to show that the decision, however reluctantly taken, was inevitable given our economic circumstances. It was equally inevitable that as it was a Government decision we had to announce it as such.
I must reject any decision that Northern Ireland has been singled out for any special treatment. It is the Government's judgment that to enable the country to emerge from a very deep recession and to create conditions necessary to be able to take permanent advantage of the upswing in the world economy, it is necessary to restrict the growth of public expenditure by several thousand million pounds in the years from 1977–80. If that is achieved, Northern Ireland has a great deal to gain from the added industrial investment that will come. The defence share of this necessary curtailment is £534 million in the three years. The Defence White Paper 1976 itemises that saving. The hon. Gentleman did not mention this factor but for the sake of completeness I feel that I must mention it—namely, that it is tempting to consider this measure in isolation and to judge the effect upon Northern Ireland in an unfair manner.

Mr. Ian Gilmour: The Under-Secretary of State says that the Defence White Paper itemises the savings as £534 million. I should be most grateful to be told where the White Paper itemises the savings.

Mr. John: It itemises certain of the measures necessary to contribute towards that saving. Although tempting, it is unjust to single out in isolation this measure because in reality there have


been a number of other measures over the past two and a half years. Measures have been taken by Governments of both major parties which have had an effect upon the amount of money spent upon defence.
In December 1973, and in the Budgets of 1974 and 1975, sums were sliced off the Defence Estimates. None of those measures affected Northern Ireland. Additionally, we undertook a thorough, comprehensive review of defence. We reviewed our commitments and the resources we devoted to them. The results were published in March of last year. Over 1983–84 we cut planned expenditure by £4,800 million at 1974 prices. This meant a reduction in the uniformed forces of 38,000 people, and in civilian strength by 30,000 people, of whom 15,000 were employed in the United Kingdom. Again, none of those measures had any direct effect on Northern Ireland.
As regards the RAF, our decisions meant a cut of 18,000 in uniformed personnel and the closure of 12 stations. Aldergrove and Sydenham were not included, but one matter that affected the two stations, in common with other stations of Support Command and civilian industry, was that the amount of aircraft servicing and engineering servicing was reduced by 35 per cent. That is mainly the result of the reduction in the Transport Force. It is therefore fair to regard this measure as part of a series of measures rather than as an isolated act.
The Defence Review settled the level of front-line forces which were needed to carry out our commitments. NATO recognised the economic imperatives which led us to make the Defence Review decisions, and the force contributions flowing from those decisions. Therefore, in considering any new cuts we had to recognise that there had been no changes in the military tasks which would justify a reassessment of our front-line contributions to NATO.
When seeking the required savings it was necessary to do so very largely within Support Command. We had to decide to utilise existing facilities to the maximum and, in redistributing the remaining work, to avoid heavy capital expenditure. Those requirements dictated that we could not keep open all the stations in Support

Command. The question we then had to ask was which stations to close. If we had decided to run them below capacity we would have nullified any expenditure economies.
St. Athan already services a wide number of operational aircraft, including the Buccaneer. It will be servicing Jaguar engines and the MRCA. The apparent dilemma which the hon. Gentleman has mentioned, and apparent congestion, do not take into account that the MRCA will not come into service immediately and, therefore, will not be available immediately. We have considered those matters and we are satisfied that the work load can be carried out by the existing facilities. St. Athan has 45 per cent. of the total engineering manpower of Support Command and facilities which would be prohibitively expensive to reprovide elsewhere.

Mr. Molyneaux: In view of the fact that the Phantom is not yet at an end in operational terms, there will be a period of overlap and front-line aircraft will be serviced at St. Athan.

Mr. John: The hon. Gentleman leaves out of account the fact that the MRCA is coming into operation and replacing existing types of aircraft. Therefore, they will not continue to be serviced at St. Athan.
Kemble has a continuing aircraft storage task which could not be moved elsewhere either in time or in point of cost. To discharge that task it must retain some engineering capacity.
The third station is Abingdon at which Nos. 60 and 71 MUs are to be combined. This is a Service-manned station, so that we may retain the in-service repair facility which would be necessary in hostilities.
The Royal Naval Armament Depot at Antrim has been devoted almost exclusively to the conversion and overhauls of the Mark 8 torpedo. Therefore, the sort of work he sought for that depot would be impossible to find. The Mark 8 torpedo has been in service for a long time and its future was limited. In the light of the need for further economies it was decided that any further modification work on it was unjustified. With that decision, and with the overhaul task being


too small to justify a separate station, Antrim had to close.
It was these facts which rendered the closure of these units inevitable, thus saving over £7 million in the target years and £3½ million annually thereafter. It also avoided our needing to lay out some millions of pounds on capital expenditure. We have tried to seek work for transfer to the stations, but that effort has been unsuccessful. I must stress that the decision now taken by the Government to the effect that closures will take place in two years' time is a firm decision. But within a decision on principle we are determined to do all we can to ease the burden imposed on the work force.
Let me outline briefly what this means. First, we recognise that we have a special responsibility towards apprentices whose apprenticeships will be incomplete at 1st April 1978. All of these at the three stations will be offered a continuation of their apprenticeship on the mainland and everyone who wishes to accept that offer will be guaranteed that this will take place. Though I can understand the reluctance of anyone to leave their homes, I would say that in this and in other cases they are merely being asked to go to another part of the United Kingdom to complete a skill which they are in course of acquiring.
The hon. Gentleman properly mentioned the importance of a broadening of experience. I do not want to prejudge the situation, but it might not be possible to broaden the situation in the way suggested in regard to existing apprenticeships. However, in certain cases they may be able to transfer to a more relevant craft. As soon as I have definite information, I shall let the hon. Gentleman and his hon. Friends know the situation.
Secondly, the jobs that fall vacant in defence establishments in Northern Ireland and elsewhere will be offered first to those who are displaced by our closures and redundancies. This will be true of mobile staff and some in the non-mobile category who might wish to work elsewhere. In taking advantage of such an offer, they will be given as much help as possible. As an example the 90 extra jobs generated at Plymouth by the residual

torpedo task will be offered to workers at Antrim.
The hon. Gentleman tried to suggest that because 90 extra jobs would be generated at Plymouth, they could easily have been kept at Antrim. But this servicing is a declining task and can be absorbed into other tasks at Plymouth, whereas the work cannot be so absorbed at Antrim.
Finally, I wish to re-emphasise that this is a closure two years hence and allows us to make an orderly rundown. In regard to Antrim there will be no job loss until August or September 1977. In the case of Aldergrove and Sydenham the work load fluctuates rather more than in other stations and it presents a problem, but with that caveat we have invited the workers in the stations to discuss with us the rundown to minimise the hardship caused. We have signified our willingness to have detailed talks on these points as soon as possible.
Our concern with the blow the news would cause was the reason why my hon. Friend and I went out to give these decisions to the workpeople personally last Wednesday. There are some hon. Members who speak glibly about phoney cuts and who believe that defence cuts are painless. I wish that they could have sat with us in these talks to learn the reality of just how painful these decisions can be.
But the talks we had there were not the end. We are ready to discuss further any of the details of the rundown and any possible additional measures to ease it. I hope that the men and women who so sensibly and forcibly put their case to us last Wednesday will take us up on that offer.
Nevertheless, however sad its consequences may be, the Ministry of Defence has been charged with providing for the defence of this country with maximum economy. We are now discharging this remit by these and the other difficult decisions. Having willed the ends, the House must be taken to have willed the means.
The resources we release will go towards industrial regeneration, in which my right hon. Friends at the Northern Ireland Office are determined that Northern Ireland will share fully. It will


continue to be our fight as a Government to ensure that this comes about.
I think it may be said categorically that the health of Northern Ireland depends vitally on the success of our struggle to bring about that industrial regeneration.

7.48 p.m.

Mr. William Craig: There is an old saying that the road to Hell is paved with good intentions. I hope that later this evening we may find that the good intentions are replaced by positive commitments to make things better.
In my constituency there is a great deal of anger on this matter, and anger has a habit of generating heat. The workers to whom I have spoken over the weekend are capable of shedding a great deal of light on the problem, and I hope that they will have an opportunity to do so. They feel that because the ramifications of the cuts are so extensive, they should have an opportunity to talk to the right hon. Gentleman the Secretary of State for Defence. I hope that he will bear that plea in mind.
I agree with my hon. Friend the Member for Antrim, South (Mr. Molyneaux) that in the interests of the national economy we need to bring about substantial cuts in public expenditure. Every time we are faced with this problem there is a tendency for us to look over our shoulder to the electorate to see how much the people will be hurt. I have a feeling that these sort of defence cuts are made too often without regard to the fact that the electorate may not realise how important defence expenditure is to their personal and national well-being. I have heard hon. Members asking across the Floor of the House "What would you cut?" Everyone shies away from such questions and people have got into the habit of believing that they are getting something for nothing. I understand that changes are likely on the Government Front Bench in the near future. I hope that they will help us to look more realistically at the sort of cuts that will have to be made.
The present proposals for further defence expenditure cuts worry me enormously, not just because of the disastrous effect they will have in my constituency but because I believe that defence

arrangements are not something that can be turned on and off like a water tap. There is no doubt that the problems of defence are not decreasing. The use of the magic word detente is not changing the reality of the situation. There have to be cuts, and I suppose that we have to learn to live with them.
What I am concerned with this evening is the application of those cuts. It is generally conceded that while the cuts are primarily aimed at effecting savings there are nevertheless a variety of considerations to be taken into account. Of all those considerations those which must rank as being most important are those with special social consequences. These special considerations must be judged within a framework of reason. When it comes to such special social consequences I do not think that there is any other part of the United Kingdom which has such a serious problem as Northern Ireland. In saying that, I am not ignorant of the many problems facing other parts of the United Kingdom. I can see the anxiety all over the kingdom at the growing level of unemployment. But the Northern Ireland situation is in many ways much more depressing. There is an aspect of hopelessness about it that will not be found elsewhere.
I say that having due regard to the announcements that have been made from the Northern Ireland Office recently. There is to be a major review of our economic position. A new survey is to be made, reportedly aimed at changing the Province's industrial base. It will review the amounts of public money paid annually in the form of subvention. I was interested to note that the Secretary of State for Northern Ireland said:
The basic aim must be to ensure that the full potential of public and private enterprise is organised in such a way as to bring about the maximum benefit in terms of industrial activity and employment over the next few years.
While we are talking about defence we must not be under any illusion that we are not also talking about industrial activity. This is particularly important for Northern Ireland in its present plight. I know how difficult it is to cope with these problems, having regard to the violence the political uncertainty of Northern Ireland and its future form of government.
I know that many in the House will be tempted to say "You have had your


chance to do something about it and failed to make any substantial breakthrough". That is hardly a fair way to approach the problem. We have a very difficult task ahead of us. The violence and continuing uncertainty is accompanied by a marked reluctance among people to invest in new industrial activity in Northern Ireland or in the expansion of existing industrial enterprises. The result is a growing hesitation among the customers of Northern Ireland's industries to place fresh orders. There is also a reluctance to extend to businesses in Northern Ireland the type of credit facilities that can be obtained in other parts of the United Kingdom.
We have about 50,000 unemployed and before long it will reach the terrifying figure of 20 per cent. of the insured population. People will be unemployed at a time when there is no hope of a speedy change. There is a growing fear in Northern Ireland that, as the United Kingdom generally picks itself up out of the recession, Northern Ireland may be passed by. In my view that fear is soundly based. This being the case there is a more onerous duty on the Government and on publicly owned industries in Northern Ireland to give a positive lead and set an example.
Rolls-Royce is a publicly-owned company which has paid little regard to the needs of Northern Ireland. It just decided to close down. Apart from providing employment, such a prestigious company is in such a position to give confidence to others. Some Northern Ireland Ministers are trotting around the United States trying to persuade people to invest. Their job will not be helped if British firms such as Rolls-Royce get up and go. The Government say that that is not their responsibility but that it is a decision of the management of the company. To a certain extent that is true. The Government, however, have the power to induce managements to see that it could be worth while remaining.
Defence contracts are in a different category altogether. The Government cannot throw the burden of blame on to a board of management. Sydenham has a history of many years as a productive and efficient unit. It came as a great surprise to me to find, not that it was to be reduced in terms of its

activity, but that it was to be closed down in two years. We have worried about it for some time. On 5th February I wrote to the Under-Secretary expressing my concern. On 19th February he wrote to me saying that no decision had been taken about Northern Ireland installations. One can imagine the bombshell effect that that had upon me and my constituents.
It is not correct to say that RAF Sydenham has not experienced the effect of earlier cutbacks. There was the loss of the Buccaneer contract after 13 years' work on that aircraft which could not be bettered in any other station in the United Kingdom. The contract was suddenly whisked away because of the consequences of the redeployment of assets resulting from defence cutbacks. The hon. Member for Chesham and Amersham (Mr. Gilmour) has first-hand knowledge of this matter. In his day as Minister, when there was the possibility of cutting back on the Buccaneer contract, he said that it should be postponed until further work could be obtained for RAF Sydenham.
It is strange that people are arguing a preference for St. Athan based on the fact that it is handling the Buccaneer contract which was in Belfast for 13 years. If someone could show good reason for not carrying out the work in Belfast, our disappointment would be modified, but station commander after station commander has paid tribute to the efficiency and productivity of the workers at RAF Sydenham. It was commonplace to see on the orders of the day reference to the exceptional productivity of RAF Sydenham. If it is said that RAF Sydenham is no longer a viable unit, it is because of Government policy and not because of the management or work force.
RAF Sydenham is unique in one major respect, namely, its facilities for mechanical component work. Those facilities are unequalled in any other RAF station in the United Kingdom. It can back up that facility by tapping a labour force second to none.
The awful thing about the decision to close RAF Sydenham is not only that it is a good unit which has a long and proud tradition with the RAF and the Royal Navy but that it is in an area


where there is little alternative employment for some of the best men in the United Kingdom who work in this industry. It may be said that they can find alternative work at Shorts.
Will the proposed cuts, phased as they are, save money? How much will it cost to provide new facilities to take over the work that has been performed at RAF Sydenham and RAF Aldergrove? How much new training will be needed to supplement the labour forces at other stations? What will be the cost in Northern Ireland of the security benefits which will have to be paid to skilled men who, because of the peculiar situation in Northern Ireland, are likely to be unemployed for a very long time? When all these considerations are added up, the cost will be enormous. I have heard the cost of redundancy payments and security benefit put as high as £3 million or £4 million——[AN. HON. MEMBER: "In the first year."]—in the first year. I am in no position to say how long the benefit payments will continue after that, but it strikes me that the alleged saving will cost the taxpayer a lot of money.
Shorts is also in my constituency. We are told that the Belfast aircraft is to be scrapped. It is difficult to say what the effects on Shorts will be, but the Northern Ireland Office continually refers to Shorts as perhaps one of the avenues open to Government to provide alternative employment for the people displaced at Rolls-Royce and perhaps from RAF Aldergrove and RAF Sydenham. The Belfast cancellation will be costly in terms not only of jobs but of the effect it will have on the economic capacity of Shorts when the Government, and the Ministry of Defence in particular, are dragging their feet on many other questions. The Belfast freighters were due to come in for a major overhaul. That work, which would have provided many jobs, will be lost.
There is a good deal of procrastination about what will happen to other work possibilities in Shorts. I understand that an agreement was negotiated for the major overhaul of 15 PR9 Canberras, but the impression among the management and work force at Shorts is that people are trying to slip out of that contract. Shorts had a viable proposition to produce a military version of the

SD330. I understand that the Government are interested and are prepared to help Shorts to find a market, but they have not come up with any money to help to meet the capital cost of developing a military version.
Shorts are more than interested in NATO's new aircraft known as the Aroack, which could give Shorts 15 years' work in producing the engine pod and pylon. If cuts must be made—and I am not sure that they must be made—I should have expected a much more positive commitment about work in other spheres.
Shorts and RAF Sydenham have one facility in common, and that is the airfield—a very fine airfield. What will happen to it if RAF Sydenham is closed? Who will be responsible for it? Shorts would like a positive assurance on that.
Every hon. Member is concerned about the increasing problem of unemployment, but I can say without fear of contradiction that no hon. Members have a greater problem than the Members representing Northern Ireland. There are no more difficult economic circumstances than those prevailing there. But it is not simply a matter of economics, important as that may be. Economic decline—and "decline" is the word, not "disintegration"—will markedly affect political progress.
Despite recent disappointments, there is still a chance of worthwhile political progress in Northern Ireland if we can instil hope that the economy will be able to weather the present storm and that jobs will be there for people. If we cannot do that, political hopes will go out of the window.
Plenty of people are jumping on the bandwagon and arguing that there will be economic withdrawal in such a way that it is the forerunner of political withdrawal. I do not believe there is a shred of truth in that and I shall keep saying so as often as possible. However, I should be misleading the House if I did not say that, despite all our reassurances, many people do not believe us. If Ministers had talked to the trade unionists we spoke to at the weekend, they would realise the truth of that statement. Actions speak louder than words. We expect publicly-owned industries and


contracts at the disposal of the Government to be used to spearhead new hope in Northern Ireland.
I hope that the fears and anxieties expressed by hon. Members from Northern Ireland tonight will not be treated as a political exercise and that Ministers will not think that hon. Members are simply going through the motions to satisfy their constituents. We are setting our minds to a problem which is causing us very grave concern. There must be a response from the Government. I appeal to Ministers to listen to us and to open all possible doors to the trade unionists who are vitally concerned. Do not let protocol stand in the way.
Northern Ireland will bear its share of the cuts. In war and peace we have always been prepared to make our share of sacrifices as well as claim our share of the benefits. Nothing has changed, but we have an abnormally difficult climate in which to work and we need positive help rather than sympathy from the Government.

8.13 p.m.

Mr. Gerard Fitt: The occasions when representatives of Northern Ireland have spoken with one voice have been too rare in the past. Tonight is such an occasion and it has been caused by the devastating news given to workers in Northern Ireland on Thursday.
We now have an unemployment rate of 11 per cent. The number of unemployed will rise to 53,000. No other part of the United Kingdom would tolerate these figures wthout elected representatives expressing grave concern and using all possible pressure to try to force the Government to change the policies which had led to such a situation.
We in Northern Ireland recognise that the United Kingdom is in the middle of a deep economic recession, but we believe that it is the Government's duty to ascertain which regions are suffering unbearably and to ease the burden in those areas by spreading out the despair throughout the United Kingdom. My hon. Friend the Minister of State has stressed on many occasions, particularly last week, the dire economic future faced by Northern Ireland. There has been no development of potential future investment.
I take great personal offence at one aspect of the present situation. The hon. Member for Antrim, South (Mr. Molyneaux) said it was good of two Ministers to go to Northern Ireland on Thursday, to meet workers and to tell them that their jobs were to be lost. I do not think Ministers deserve any credit for bringing such awful news to Northern Ireland.
The Government should have persisted with their expressed policy of control of consulting the trade unions on every aspect of life and work, including wages, conditions, employment and unemployment. The least they should have done was to discuss with the trade union movement in Northern Ireland what was likely to happen to these three establishments. Ministers have said that the Irish Congress of Trade Unions has acted with great responsibility throughout the troubles in trying to ensure that they did not enter into industries and on to the shop floors. The fact that the Congress was not consulted or told what was to happen to some of the most skilled workers in the trade union movement in Northern Ireland must be condemned. The Government stand condemned for the callous and brutal way in which the White Paper decisions were made known to the work force.
The Minister of State is on the record as saying that not a single United States dollar of new investment has come to Northern Ireland since 1973. I hope that this is not an admission of defeat. The reasons for this lack of investment cannot be laid at the door of the Government alone. We in Northern Ireland must accept some responsibility. We have not been entirely innocent in the problems which beset Northern Ireland.
Some hon. Members from Northern Ireland may think that this is a political remark, but I have to say that the UWC strike in 1974 will not have given much confidence to American or other investors. While we accept that we are responsible, to some extent, for our own problems, the decision of the Ministry of Defence will only aggravate the problem. Potential investors will be inclined to ask why they should invest in Northern Ireland when the Government are withdrawing an industrial base. That must be the logical effect.
Some figures were quoted recently in the Northern Ireland Standing Committee from the booklet published by the Northern Ireland Office on social and economic trends in Northern Ireland. One of those figures, which is still relevant, is that 4 per cent. of all claimants for supplementary benefits within the United Kingdom live in Northern Ireland, and 15 per cent. of all moneys paid by the United Kingdom Government by way of supplementary benefit is received by the people of Northern Ireland. Some hon. Members have referred to that figure in a disparaging way, the implication being that Northern Ireland, only a small part of the United Kingdom, receives a great deal from the Treasury by way of social security benefits. The decision taken by the Ministry of Defence will do nothing to reduce that figure. If a survey is taken next year perhaps more than 4 per cent, of all claimants and more than 15 per cent. of all moneys will be related to Northern Ireland because of that decision.
I wonder whether the economies will achieve the results shown in the White Paper. Since the end of last week, when these disastrous cuts were announced, the trade unions have gone into the problems which will arise and the cost to the Exchequer and the people of Northern Ireland in social and human terms. The trade union movement is to be congratulated on putting so much energy into bringing to light the terrible cost of the decision. In the first year it is estimated that the total cost to the social security services in Northern Ireland will be £3 million, added to which is the cost of the transfer of all these establishments to other parts of the United Kingdom, which is estimated at £25 million. Perhaps at the end of next year, or the year after that, the Ministry of Defence will ask us to look at the reductions which have been achieved by the closure of these establishments.

The Minister of State, Northern Ireland Office (Mr. Stanley Orme): Figures have been quoted in the House, quite rightly. To the best of our knowledge the assessment is that £3·5 million a year will be saved on a permanent basis by the closing of these establishments. We estimate that the cost of unemployment benefit, at the most, will be £1·5 million a year. There will obviously

be a large net saving over the years. How long people will stay on unemployment benefit is a factor which has to be considered.

Mr. Fitt: The very fact that my right hon. Friend is able to intervene shows that he had discussions with the Ministry of Defence before the closures were announced. I sincerely hope that my right hon. Friend expressed his total opposition to the closures.

Mr. Orme: I should put on record—the Secretary of State has done the same—that there is no division between Northern Ireland and Ministry of Defence Ministers. This is a collective decision of Government for which we all accept responsibility.

Mr. Fitt: The fact that there is no division does not necessarily paint the full picture. I hope that there was a division even though it has been overcome. I am sure that it is recognised by the Government that before major decisions are taken the fullest consultation should take place with the trade union movement. That did not happen on this occasion. The trade union movement has a right to feel aggrieved that a decision of such economic importance, which will bring such disastrous consequences to many people, was not announced until the end of last week.
The trade unions and the Labour movement are united in their attempts to cut public expenditure as much as possible in the interests of the economy as a whole. Some trade unions have expressed opposition to the high cost of defence. It is no justification for a Minister to say, "You want cuts in defence but you do not want them in Northern Ireland". The Labour Government have a social conscience and there are social reasons why they should do whatever is possible to create employment and to maintain existing employment in Northern Ireland. There is no contradiction there. Decisions taken by the Government are not taken purely for economic reasons. They are taken after consideration of all other aspects of life and the social consequences of those decisions.
Yesterday I read a Press report that the Northern Ireland Office had underspent £20 million. That £20 million will


go back to the Treasury because it was not spent within the financial year. Is that right? If it is, I see no justification for it because that £20 million could have been spent in Northern Ireland in trying to erase some of the poverty and despair. We have been told that the population of Northern Ireland is 2½ per cent of the population of the United Kingdom. But Northern Ireland has had to bear the brunt of a 20 per cent. cut in civilian personnel.
What has happened in Northern Ireland has not happened in other parts of the United Kingdom. In England, Scotland and Wales, there have been no closures as such. There has been a cutback and a certain number of men have been threatened with the loss of their jobs. But three defence establishments in Northern Ireland are threatened with total closure.

Mr. John: In the Defence Review, we announced the closure of 12 stations, all on the mainland.

Mr. Fitt: As I see it, 20 per cent. of the total personnel to be displaced will be in Northern Ireland.

Mr. John: The point I tried to make, and which I reiterate, is that 30,000 civilians were displaced by the Defence Review last year but none was in Northern Ireland. It was only when the reduction of a further 10,000 came about that the 2,000 people in Northern Ireland were affected. That is a truer percentage than the one which my hon. Friend is quoting.

Mr. Fitt: We could bandy figures about all evening, but in 1967 and 1968, when the closure of RAF Sydenham was first threatened, about 37,000 people were signing the unemployment register in Northern Ireland. The then Labour Government decided that they could not close the station because of the high level of unemployment in Northern Ireland. Now, Northern Ireland has 51,000 unemployed but the present Labour Government can afford to ignore that awful figure.
Those of my colleagues with constituency interests in these closures will, I hope, seek to catch your eye, Mr. Deputy Speaker. I merely want to impress on the Government now that, at the moment, there does not seem to be any possibility of attracting investment to Northern

Ireland, which in turn means that there is no possibility of creating any new industry there.
The right hon. Member for Belfast, East (Mr. Craig) reminded us that the road to Hell is paved with good intentions. I remind the House of another adage—"Live, old horse, and you'll get grass". There are horses in Northern Ireland who have been living for 20 years on the dole and they cannot see any grass at all.
I hope that my right hon. Friend the Secretary of State will now regard it as a very urgent necessity, in the new strategy he has announced to the people of Northern Ireland, to try to retain whatever jobs we have there now. There have been dire and gloomy forecasts, particularly from trade unionists, that before the end of the year the figure of unemployment in Northern Ireland could be 60,000. No civilised society can be asked to accept such a high figure of unemployment.
If we are to see an end to the present troubles, even though many of them are political and have nothing to do with employment, it is necessary for the Government to use all their skill, in collusion with and with the support of the trade unions movement and of all Northern Ireland's representatives in this House, to do all they can to cut back unemployment in Northern Ireland.

8.33 p.m.

Mr. Peter Mills: I am grateful for the opportunity to speak in this debate. It is the first time I have spoken on Northern Ireland since I had the privilege of being a Minister in the Northern Ireland Office. I still have a deep interest in Northern Ireland. It is rather a love-hate relationship, with the love getting the upper hand most of the time, although there are times when some things said make the relationship more of hatred. Let us hope that the love predominates. We do care and we are interested.
I am opposed to, and deeply disturbed by, the defence cuts in the country as a whole. We need to be on the alert and to be prepared more than ever to meet any of the possible forces which could assail us. It is not only an economic argument but a matter of defence. The first duty of any Government is to protect the people.
I could argue about cuts and who is responsible for the economic mess in this country but I should be ruled out of order, Mr. Deputy Speaker. But the fact remains that we have to get our priorities right, and I believe that defence is one of those priorities.
I join with hon. Members here in being bitterly opposed to the defence cuts proposed in Northern Ireland—and now confirmed—at Aldegrove, Sydenham and Antrim. During my stay over there I visited most of these establishments. At Aldegrove there was a factory where the men were not only very skilled but also very efficient. They were doing an essential and profitable job for this country, with an export potential, in that they refurbished other aircraft.
One of the best ways of overcoming the terrorists and the problems in Northern Ireland is to provide, within reason, as much employment there as possible. That is a fundamental reason, but the Government seem to have overlooked it. Normally I do not disagree with the Minister of State in regard to Northern Ireland, but I should have liked to see a far greater effort to make sure that the cuts did not come to Northern Ireland. We ought to try to provide full employment, or get as near to it as is possible. When a man has a regular job he is unlikely to engage in terrorist activity. I believe that the Government's action will simply add fuel to the problems and troubles in Northern Ireland. That is why I feel so strongly about it.
I accept that if cuts are not allowed to bear so harshly on Northern Ireland as on other areas, it involves a certain degree of preference. Nevertheless, I believe that in the long run it is cheaper, better and more profitable to do this. It is, of course, difficult to explain to the other parts of the United Kingdom why certain special aid should be given to the Province, but Northern Ireland has a very real and special problem. That is what makes it different from other areas of the United Kingdom.
The principle already exists. The Government need not be shy, therefore, in making special provision for Northern Ireland. It has been done for years. When I had the privilege of being a Minister concerned with Northern Ireland,

the principle was applied in agriculture.
It was not easy to explain during the difficult times which faced agriculture some years ago. It was not easy to explain to my constituents, or to other United Kingdom farmers, why remoteness grants were given to Northern Ireland, and special measures taken, in order to keep the meat plants going. We also helped in egg production, when there was a glut of eggs. A special provision was made to help Northern Ireland in the difficult circumstances then prevailing there. Extra agricultural subsidies were given. That was done because of the problem of unemployment and the effect that unemployment would have on further terrorist campaigns. None of these special measures was available to farmers in other parts of the United Kingdom.
I believe that exactly the same principle should be applied in the present situation in Northern Ireland. I always found it difficult to justify these measures to my constituents in the South-West of England, but they were accepted, with grumbles. Our major consideration at the moment must be to keep people fully employed in Northern Ireland, off the streets and away from terrorist activities. The Government must think again on this issue, otherwise a very real mistake will have been made.
It would be very nice for me, as a West Country Member, with a constituency all round Plymouth, to ask, for example, for employment to be found for another 90 people in my area. But it would be extremely foolish to think like that, because I should not be looking at the United Kingdom as a whole and at what is best for the United Kingdom. Although it might mean gaining another 90 jobs in the Plymouth area, I ask hon. Members to think of the damage that this could do in Northern Ireland and how its consequences could prolong the agony and the difficulties of Northern Ireland. I am prepared to go to my constituents and to defend what I have said tonight because I believe that most sensible people will look at the situation in that way. But the Government should do so as well.
Northern Ireland is part of the United Kingdom, and that should be said time and time again. We have exceptional


problems mere and, because or them, we have to take unusual, difficult and exceptional steps for Northern Ireland. Northern Ireland is a serious drain on United Kingdom resources. But for Heaven's sake do not let us make the position worse. Let us use every means to overcome the problems.
It is no good going only part of the way to clear up the difficulties there. An all-out effort must be made, and this means sacrifices in other parts of the United Kingdom. It means sacrifices in terms of employment. It means men who serve in the British Army going there and sacrificing their lives, if necessary. Even if in only a small way, these cuts will put back the solution to the problems of Northern Ireland.
1 ask hon. Members to think for a moment of the effects of these cuts on skilled men—because they are skilled men. I wonder what they must be feeling tonight. The loss of a skilled team over there is a severe blow to Northern Ireland. I am well aware of all that has been done by former Ministers and by Ministers in the present Administration to build up these skilled teams and to have them ready for when the expansion day came. This decision puts the whole plan into reverse.
Then there is the effect on existing firms and on the prospects of attracting other firms to Northern Ireland. It weakens the policy of bringing firms into Northern Ireland which are needed there so desperately. What are they to think if the Government retreat? That is what the Government are doing. This is no example to give private enterprise firms from abroad. They will say "But look at what the Government are doing over there." What an example to set! The Government must think again about this.
What about the reaction of the man in the street over in Northern Ireland? It is obvious now that we have settled down to a period of direct rule. What a fine way to start off direct rule again! The man in the street must be asking "Are the Government intending to pull out?" I can see no other way in which he can be thinking.
I hope, therefore, that the Government will not take the line that this is a firm decision. They need in the meantime to

try to find alternative work there for the skilled men involved. That is essential. It is a shame for the Government to come to this House saying "It is finished." The Minister and others should be redoubling their efforts to find alternative work for these men if the work cannot be kept going in the military sense.
We have heard a good deal about the savings involved in this decision. In my view, they are not all that great, especially if we set against them the additional troubles and difficulties and their cost. I do not think that there is very much in it at all.
hope that I have succeeded in proving to the Minister and to the Government that Northern Ireland is a special case. It has to be dealt with on that basis, and further sacrifices have to be made. If any cuts have to be made—and I do not like saying this because I know the effect that such a policy could have on my own area—it is right that Northern Ireland should be treated as a special case. I hope that the Government will think again before it is too late.

8.45 p.m.

Rev. Ian Paisley: This debate tonight is one of great solemnity, which should have a sobering effect upon all hon. Members. We are not accusing Ministers of heartlessness. We do not say that they delight in telling people in Northern Ireland that they will lose their jobs. We do not accuse the Minister of State of feeling delight at telling people that they will be permanently unemployed. We are saying that in these circumstances the impact of these cuts should be carefully reconsidered.
It was made clear to us when the leader of our group, my hon. Friend the Member for Antrim, South (Mr. Molyneaux), my hon. Friend the Member for Down, North (Mr. Kilfedder) and others met the Minister that this decision was made at the highest level of Government, not merely by him as a junior Minister. We believe that the reasonable request of Northern Ireland trade unionists, supported by all the Northern Ireland Members, for a meeting with the Secretary of State for Defence should be granted. I trust that the Minister of State will tell us tonight that that request will be favourably received, that those who made the decision will have the opportunity of


hearing at first hand the case from Northern Ireland, to explain why they are sticking by their decision or, if the evidence so convinces them, that they are prepared to reconsider.
My right hon. Friend the Member for Belfast, East (Mr. Craig) dealt with the matter that affected his constituency. Since the closures at Aldergrove and Antrim affect my constituency—they are on the border between North Antrim and South Antrim—I should like to deal specifically with those closures. The announcement that the three establishments that provide support services are to be closed was a disastrous blow not only to the Northern Ireland economy but to the morale of the people there. It is not correct to argue, as Ministers have argued, that similar events are taking place on the mainland. We are not losing some of our establishments: we are losing them all. We are not suffering a cut-back in employment: we are suffering the total annihilation of these jobs. The people employed in them will all be on the dole. At Sydenham and Aldergrove there will be a rapid close-down, starting almost immediately, and while it may be 12 to 18 months before the bite is felt in Antrim, towards the end of the two-year period the pace will quicken.

Mr. John: It is precisely the phasing of the rundown that I said was still open to negotiation between the trade unions and the management. I said that we should be inviting the unions for detailed talks. The hon. Member should not pretend that there will be a rapid immediate rundown in these stations. That is what the talks will be about, and I hope that he will concede that that is what I told him.

Rev. Ian Paisley: I accept what the Minister says about that, but I remind him that when the matter was discussed with my colleagues those were the dates given to us. The Minister said that he would be happy to have further talks with the trade unions about them, but the fact is that those establishments will be run down in that way.
The hon. Member for Devon, West (Mr. Mills), who has served in Northern Ireland, said that no matter what opinions various hon. Members might hold, and no matter that the right hon. Gentleman

says that there is no economic disengagement by Britain, the man in the street thinks differently. No action has been taken to prove the contrary. I remind the Government that these accusations originated not on these Benches but from the trade unionists, from the Minister's own political friends in Northern Ireland.
Let us look at the economy of Northern Ireland. The computer industry has gone. In the telephone industry there is a shaky situation at Standard Telephones and Cables, with the close-down of the plant at Larne. Rolls-Royce has been axed, and now there is the cut in Services support. As we see these hard facts staring us in the face, the man in the street has a right to say "Surely something must be happening to cause a disengagement by the Government from our economy."
It has been rightly argued from these Benches that in the private sector the Government cannot do very much, although it has also been argued that they could give better incentives. But when we come to those industries in which the Government have a real say, or have control, the people of Northern Ireland have a right to tell them "Give us a tangible demonstration that you have your priorities right for the economy of Northern Ireland." It has been said that the Rolls-Royce board took the decision, but the trade unions have argued to the contrary that the Government could have influenced that decision.
The closures we are discussing are the result of a decision by the Government themselves, as they admit. This is one area where they could have done something vital. They could have said "We shall not close these establishments".
I should like to mention the situation in the Royal Navy armaments depot at Antrim. I think that it has been accepted that Antrim did an excellent job. Even the Ministers who announced the closures freely admitted that the depot was doing a job second to none. It seems to be believed that the Mk 8 torpedo is obsolete. Perhaps the Minister could tell us for how long it will be of use. Is it not a fact that there will be no phasing out until the 1990s, that it is exported, and that certain foreign Governments have ordered some numbers of it? Is it not wrong to state that because the torpedo is obsolete, the factory should be closed?
Is it true that the output from Antrim is sent to the Faslane naval base? Antrim is closer to Faslane than Plymouth is and transportation costs are markedly less, so how can the move be justified? Is it a fact that of the 90 jobs that we have heard about 50 are jobs for craftsmen and 40 are miscellaneous? What facilities in the way of housing and so on will be offered to these workers in Plymouth? What real possibility is there of these people being employed in Plymouth in a way which would make it easy for them to leave Northern Ireland?
How many apprentices are employed in Antrim? Why did recruiting go on, if the Government intended to close down the depot, right up until the last minute before the White Paper was published? Trade unionists in Northern Ireland are alarmed about what has happened and about the lack of necessary consultation. They have asked Northern Ireland Members to put certain questions to the Minister. If he cannot answer them all tonight, perhaps he will write to us.
Are there any plans for further modifications of the Victor Tanker and if so where will that work be allocated? Is it intended to place the airframe modification work for the Phantom at Hawker Siddeley Aviation, Hull? Is it right that HSA already has substantial work on Harrier component manufacture, BAC 111 component manufacture and European airbus wings? Will the work force there be increased, and if so by what figure?
Will the refurbishing work on 80 Canberras be placed at BAC Preston? Does BAC Preston already have substantial orders for manufacturing Jaguar aircraft and South American Government contracts for Canberra work and the manufacture of the 385 MRCA for the RAF?
Is it correct that demodification work will be required on the Royal Navy Phantom together with RAF modifications? If so, where will that work be placed? Where will the modification of the Sioux gunpods at present undertaken by RAF Aldergrove be undertaken in future? Will the runways at RAF St. Athan require major modifications to remove a slope on the runway to accommodate

the Phantom and the MRCA? If so, what will that modification cost?
Have the senior engineering staff been consulted on the proposed closure? The work force has reason to believe that it may not agree with the decision. Even if the RAF engineering support wing at Aldergrove is, as projected, totally closed, there will nevertheless continue to be overheads, including security costs and so on. What are those costs likely to be?
The Minister intervened earlier to say that my hon. Friend the Member for Antrim, South was talking about keeping open the naval depot at Antrim. In fact my hon. Friend was arguing that beside that depot there is also the Royal Engineers depot. My hon. Friend was asking whether it would be possible for the overheads to be carried by both establishments so that these 80 jobs could be preserved with a cut-back in overheads. That is what he was arguing. Surely it is reasonable to argue in that way. I should like the Minister to take that matter on board and to consider it, because that could be a way out for the saving of these jobs at the Royal Naval Armament Depot in Antrim.
There is one question that the people of Northern Ireland are asking, and that is whether there will ultimately be any real savings. The Minister of State mentioned a figure, and various figures have been thrown out in the debate. What will the redundancy figure be—before we start with health and social services benefits? Is it not a fact that because many of these men are skilled in a particular craft, they will find it almost impossible to be re-employed? Is it not a fact that some of them will never be re-employed?
That is the argument that the trade unions have been putting to us. I should like the Minister's comments on that matter. If that were so, I am afraid that the Minister's figure, while it may be the figure for health and social service benefits——

Mr. Orme: For unemployment.

Rev. Ian Paisley: —would not be the figure that would include the redundancy payments. The right hon. Gentleman is seeking to get jobs for Northern Ireland, and we wish him well in the work that


he has to do in that regard. However, he will know very well that if he were trying to create 2,000 jobs in Northern Ireland, there would have to be an expenditure of about £25 million. Therefore, one can add that figure to the unemployment benefits and the redundancy payments that will have to be paid out. I would not put the transfer as high as does the hon. Member for Belfast, West (Mr. Fitt)—£25 million. I do not know how much the transfer would be. However, even if one adds those figures together, one finds that a colossal sum will have to be spent.
In the interests of Northen Ireland, surely it would be better at this time to re-think the whole position. Why should be try to create new jobs at a cost of £25 million when we already have these esablishments there and a certain degree of work that could be put to them? There may be a cut-back in the total employment force, but it would be better to have a cut-back than to wipe out the whole force.
I ask the Minister seriously to consider the view that this debate is not a debate in which the philosophy of one political part of Northern Ireland says one thing while the other part says directly the opposite. In Northern Ireland we are often told "We wish that you people could agree." This is a matter on which we are absolutely agreed.
We ask the Minister to hear the united voice of Ulster tonight. This is a very important feature and I hope that he takes it on board. Will the Minister please tell us tonight that his right hon. Friend, who took the decision at the highest possible level, will meet the trade union representatives and hon. Members and that we can put our case to those who made the decision? We should then at least know that we had exhausted all the democratic avenues available.
As the Minister of State well knows, in Northern Ireland today a very serious situation is arising. Unless we can show that there is some validity in parliamentary work and unless we can prove that Parliament and debate mean something, the people of Northern Ireland could turn their backs upon democracy altogether. I do not want to talk about the Ulster Workers' strike, but I should like to make one brief comment. The danger in Northern Ireland has been the rejection

of the democratic principle, as seen by the people of Northern Ireland, and that has the result of the people there wanting to adopt extra-constitutional methods to get their voices heard.
In view of the Minister's own experience, I ask him to do something in Northern Ireland. It is to hear the united voice of the elected representatives in this House and to help the trade unions, which are trying to retain this work. Doing so will prove to the people of Northern Ireland that at least the voice of their elected representatives, when they speak with one voice, is harkened to and heeded.

9.5 p.m.

Mr. James Kilfedder: When the Under-Secretary of State for Defence announced the closure of the three civilian defence establishments in Northern Ireland he said:
In the longer term we want to ensure that when the economy picks up we shall be in a position to maintain or improve our industrial capacity.
I ask: improve whose industrial capacity? I do not believe that this decision will in any way contribute to the future industrial capacity of Northern Ireland. Indeed, the closure of the three defence establishments, coupled with the closure of Rolls-Royce at Dundonald and of ICL at Castlereigh, a decision which was deliberately taken by the Government and aided and abetted by the Northern Ireland Office, will destroy the skilled engineering base upon which Northern Ireland depends for future prosperity when there is an upsurge in the economy. As that engineering base will have been destroyed to a great extent, regrettably we shall not be able to benefit immediately from any improvement in the economy.
When opening the debate the Under-Secretary stated that the savings from the cuts would go towards industrial regeneration. No matter what contributions the Government may make to Northern Ireland as a result of these cuts, they will not offset the damage done by these closures. Figures may be bandied about across the Floor of the House, but no proper judgment can be made until hon. Members, the trade unions and those employed in these establishments are given all the figures so that they are able to examine them. I do not accept merely


one or two figures. All the figures are needed before the people of Northern Ireland can say that this is a sane decision or a foolish one which will jeopardise Northern Ireland's economic future.
For instance, we need to know the cost of providing new jobs for about 2,000 people. That must be a colossal figure, far above any saving the Government will make from these closures. It should be borne in mind that the abandonment of these civil support services in Northern Ireland is madness in a part of the United Kingdom which is geographically divorced from the rest of the nation. We should pay more attention to the security of this country. The Government are indeed making a grave mistake.
We have heard many compliments paid to the people employed in these establishments. I join in praising them. The work study experts from the Ministry of Defence have consistently reported, for instance, that Royal Air Force, Sydenham is far and away ahead of other units in the United Kingdom in layout, facilities, throughput and quick turnround of aircraft which land there for urgent repair work. Sydenham is unique in having both seaport and airport facilities. Other maintenance units have to arrange long and costly road journeys for material and completed work. At Sydenham the ships can come to the wharfside and transport aircraft can land on the adjacent airfield. No other establishment in the United Kingdom has these facilities.
About 55 per cent. of the work at RAF Sydenham is on Phantom aircraft and their components. About 30 per cent. of the work is on Hunters and Sea Devons and 15 per cent. is on components for other aircraft. That work is doubly interesting when we realise that there are generally two to three times more supervisory grades at St. Athan and other such units in the United Kingdom than at Sydenham.
Royal Air Force Sydenham has an important rôle to play in NATO. During and after every NATO exercise, urgent calls are made to Sydenham for the station to carry out repairs to components, especially Phantom components. The work is carried out immediately by those employed at Sydenham. Within a few hours of the component being landed at Sydenham by aircraft it is on its way

back to the grounded aircraft, whether in Germany or elsewhere. It is a remarkable commentary on the usefulness and importance of Sydenham that despite the transfer or theft of the Buccaneer aircraft from Sydenham to St. Athan, some Buccaneer modification work is still sent to Sydenham. Perhaps the Minister can explain why that is done.
All the machinery and all the plans for the work on the Buccaneers were sent to St. Athan, which was in future to undertake the work. The engineering staff at Sydenham had to look up their personal notebooks and rehash the drawings so as to do the work. They have done so, and done so well.
It is worth recalling the dismal story of the fate of the Buccaneers after component repair work was transferred from Sydenham to St. Athan in 1973. I understand that since then about 36 Buccaneers have been waiting for modification from Mark I to Mark II specification. I believe that not all the equipment for the Buccaneers that was removed from Sydenham has yet been unpacked at St. Athan. That is because the St. Athan staff cannot cope with its work load. It is a disgrace that vital defence work is being left unattended when the men who can do the job and who are anxious to do it—certainly they are skilled to do it—have had it removed from them. It seems that they are now to have the remainder of their work taken from them.
Sydenham is the only support unit in the United Kingdom, and perhaps in NATO, which regularly repairs Lox Pac oxygen pressure tanks for high altitude flying for the Phantoms. British Oxygen, which manufactures the equipment, sends employees to Sydenham to learn how to carry out the work. The German and Italian air forces have called on Sydenham for the same repair work. So high is its reputation that its services have been sought on occasions by the manufacturers of the Phantom in Cleveland, Ohio.
It seems that the Government have a case to answer. I believe that we must oppose the Government. We must vote against them to demonstrate that the people of Northern Ireland will not meekly accept this decision. The National Enterprise Board is closing down Rolls-Royce in Northern Ireland but the Northern Ireland Development Council,


with neither the resources nor the teeth of the NEB, has been left to try to pick up some of the pieces. We have the ludicrous situation of one Government authority creating problems for another Government agency to try to solve. That is not government but misgovernment.
The Prime Minister accused the Northern Ireland people of being spongers, but I accuse the Government of following policies that put men and women out of work. Unemployment and other benefits for 2,000 unemployed will cost between £3½ million and £4 million a year. There are even greater sums involved. No doubt before long we shall hear Government Ministers indicating the increased financial burden borne by the United Kingdom for social benefits for the unemployed in Northern Ireland. The Ulster people will be lectured and criticised for a situation brought about by a deliberate decision of the Government. But the Ulster people will not accept responsibility for the situation. I do not want to hear accusations of spongeing against people who are without employment through no fault of their own.
The Secretary of State for Northern Ireland has declared that the topic of cuts and the adverse effect on Northern Ireland was discussed in Cabinet. What he does not say is that he fought against those cuts. I have come to the conclusion that he did not do so in Cabinet. Had he the interests of the Northern Irish people at heart, he would have done so. We know that the Secretary of State for Northern Ireland is somewhere in the Palace of Westminster tonight. Perhaps he is spearheading the campaign mounted by the Foreign Secretary for leadership of the Labour Party. The Secretary of State should be spearheading the campaign to save jobs in Northern Ireland.
The consequences for Northern Ireland of these cuts on top of the closures of other factories in Northern Ireland is to destroy at a stroke the whole base on which the Northern Ireland light engineering industry has been erected. The long-term consequence will be that when the hoped-for revival of world trade takes place in 1977, the highly skilled human resources essential for speedy recovery in Northern Ireland will have been dispersed and run down to such an extent that recovery is bound to be slow.
The old Stormont Government were criticised when it was considered that there was too high a degree of unemployment in the Province, but certainly that Government were extremely active in trying to bring industry to Northern Ireland. It is true to say that 40,000 new jobs were created in the last five years of its existence and 163 new firms came to Northern Ireland. The present Administration, some of the members of which attacked the old Stormont because of the unemployment level, are associated with the closing down rather than with the opening up of new enterprises. They are now responsible for the creation of more unemployment, and they have much to answer for to the people of Northern Ireland.

9.18 p.m.

Mr. Robert J. Bradford: There is at stake in this debate not only 2,000 jobs in Northern Ireland but the ability of people in Ulster to trust the word of the United Kingdom Government. It is our task to reiterate the words used by the Minister of State, Department of Industry, that Northern Ireland needs a broadly based economy. If ever there was an opportunity to bear out those words in reality, it is to be found here in the retention of the work involved in the defence sector in Northern Ireland.
We do not come to this House tonight to reiterate the harrowing and devastating words of the theme tune of another age, "Buddy, can you spare a dime?" We are asking not for charity, but for a fair share of the expenditure cake and related employment.
We ask simply that the Canberra works should be retained pro rata to the number of that aircraft remaining in service. We ask that the Phantom should be retained at its current level in Northern Ireland and that a quota of MRCA aircraft, which could provide additional employment, should be directed to Northern Ireland.
In the Minister's words there are a great number and variety of aircraft serviced at St. Athan. The work on the Phantom would be done alongside that on the MRCA. The point which my hon. Friend the Member for Antrim, South (Mr. Molyneaux) was making was that it will not be possible to meet the


deadline with those two front-line aircraft serviced at St. Athan.
There has been much talk about cuts. These are not real cuts. They are a transference of work. The only cuts there are involve the decimation of the livelihoods and the future of the people of Northern Ireland. Let us not over-play the special situation in Northern Ireland. Of course there is a special employment situation. There is also a hard-working group of men with a great productivity record and good industrial relations who are part of the United Kingdom workforce.
These men have a right to employment. I ask for a categoric assurance that work on the Blowpipe missile currently undertaken by Short will remain there in spite of the movements indicated by transferring some of the work to Blackburn and other places on the mainland.

9.22 p.m.

Mr. Ian Gilmour: I am grateful to the hon. Member for Belfast, South (Mr. Bradford) for cutting short his speech. I can assure him that, apart from his speech, mine will be the shortest in the debate.
This is a highly important subject and one which the hon. Member for Antrim, South (Mr. Molyneaux) and his hon. Friends were right to bring before the House. It is not at all surprising, as the hon. Members for Belfast, West (Mr. Fitt) and Antrim, North (Rev. Ian Paisley) said, that this is a subject on which the spokesmen of Northern Ireland should speak with one voice. I mean no disrespect to the Under-Secretary of State for Defence for the Royal Air Force or to the Minister of State for the Northern Ireland Office when I say that it is surprising that neither of the Secretaries of State involved has bothered to come along to the debate. We are discussing something which has serious effects.

Mr. Orme: I assure the right hon. Gentleman that no discourtesy is meant to the House by either of my right hon. Friends. They both have very important previous engagements. If the right hon. Gentleman knew what they were I am sure that he would understand.

Mr. Gilmour: I accept that. But it is normal practice that engagements in this

House take precedence over any other engagements. I do not take back what I said.
Even if we do not accept the predictions of the right hon. Member for Belfast East (Mr. Craig) that unemployment is liable to rise to 20 per cent., it is, nevertheless, true that unemployment in Northern Ireland is high. The measures announced in the defence White Paper raise that figure considerably. We are to debate the defence cuts next week so I will not talk generally about them, although they were much deplored by my hon. Friend the Member for Devon, West (Mr. Mills) and the hon. Member for Down, North (Mr. Kilfedder).
It was interesting that the Under-Secretary, evidently by a slip of the tongue, said that the defence cuts in the White Paper had been itemised. Until the Minister of State was good enough to itemise the savings of £3·5 million, no other figures had been given. Since the Under-Secretary evidently thought that the cuts had been itemised, perhaps I could ask him to see that this is done before the defence debate next week. I see that he shakes his head. I am not surprised.

Mr. John: The right hon. Gentleman is inaccurate. First, I repeated the figures given by my right hon. Friend, and plainly the right hon. Gentleman was either unaware of them or perhaps was not paying the attention for which he calls in others. Secondly, a number of other stations are listed in the Defence White Paper as being affected by the cuts. That is what I meant by itemisation.

Mr. Gilmour: All that I said was that the cuts had not been quantified in the White Paper, and that is true.
The stations which are to be closed are highly productive and efficient. That is not in dispute. As the right hon. Member for Belfast, East implied, the question of the closure of RAF Sydenham was a hardy annual when the Conservative Party was in office. Although the work done there was beyond criticism, there was a strong argument on purely defence grounds for closing it, but we always refused to close it because we thought that the wider effects in Northern Ireland were more important than the


economies which would be effected by closing it.
Unless my memory deceives me, I do not think that we ever wanted to close Antrim or Aldergrove, but I may be wrong. It would never have occurred to us in a million years to close all three at the same time. It is extraordinary for the Government to do that. As the hon. Member for Belfast, West said, this is simply a matter of Government decision and has nothing to do with the quality of work done at any of the stations.
On purely defence grounds, there are good reasons for making the cuts, because there will be an economy and the defence budget is under extreme pressure, but I should like to hear from the Minister of State whether the Ministry of Defence still recognises any responsibility for regional employment policy. If there are to be cuts, and if they are far from bogus and far from painless, this is the logical outcome of them.
We are, of course, opposed to defence cuts and therefore these results would not have followed if we had been in office. In any event, even if they can be defended on defence grounds, they cannot be defended on Northern Ireland grounds. As the hon. Member for Belfast, West said, no other region has such a serious problem as Northern Ireland.
I must disagree with the hon. Member for Antrim, South because I do no think that one can oppose the cuts and at the same time say that if they were not made there would not be an increase in public expenditure. Those two things are incompatible. The cuts can be opposed only by saying that they will lead to an increase in public expenditure but that the increase should take place for other reasons. There is the caveat implied by my hon. Friend the Member for Devon, West. As a result of increasing unemployment and increasing political unrest, there may be an increase in terrorism which will lead to an increase in military and other public expenditure, but that is unlikely.
Therefore, in my view, the cuts cannot logically be opposed except on the ground that the public expenditure which would result from their maintenance is necessary on other grounds. The cuts are not only extremely untimely but seem to have been made in a hamfisted, if not

cavalier, manner. I know that there are difficulties about consultations in these matters. Nevertheless, considerable resentment, rightly, seems to have been caused among trade unionists and other workers affected by the cuts because they were faced with a fait accompli.
I hope that the Minister of State will be able to dispel the impression of a negligent attitude having been adopted to the future of the Northern Ireland economy, because there is a serious problem here. There are fears of the economic withdrawal of this country from Northern Ireland. We hope that is not true. No doubt the Minister of State will be able to reassure us.
I hope that the Minister will also be able to give the absolute assurance asked for by the hon. Member for Antrim, North and other hon. Members that one or, preferably, both Secretaries of State will agree to meet the people involved to discuss the closures.

9.30 p.m.

Mr. J. Enoch Powell: We have had the benefit in this debate of the presence and intervention of one of the Defence Under-Secretaries. It was certainly appreciated that the two Defence Under-Secretaries themselves faced the brunt of having to announce these decisions in Northern Ireland.
Yet that is not good enough. This is a decision on defence grounds of major importance in Northern Ireland, and nothing less is satisfactory than that, at the united request of hon. Members representing constituencies in Northern Ireland, they and representatives of the workers concerned should have the opportunity to speak face to face with the Secretary of State for Defence, who is the responsible Minister. There should be no difficulty about this. It should be automatic; but I hope the Minister will be able to assure us that it will happen. Nothing could be more in the interests of the Government themselves than that they should be seen to be keeping nothing back from those who will be affected.
This debate is unprecedented in that it is the first occasion on the question of Supply when the subject has been chosen by hon. Members representing the greater part of the seats in Northern Ireland, though not, as is said on the


Order Paper, by the United Ulster Unionist Council—I think there was some little confusion there. I hope that the precedent will not long remain unique.
Another characteristic of the debate, pointed out by the hon. Member for Belfast, West (Mr. Fitt), is that hon. Members from Northern Ireland on both sides of the House have been at one. This is by no means exceptional, and it will become less exceptional. Maybe those looking for power-sharing will find it—and in the place where, in the proper democratic sense of the expression, it ought to be, namely, on the Floor of this House.
There is a striking map on page 74 of the Defence White Paper which shows the layout of the major support establishments in the United Kingdom. There are two circles in Northern Ireland—one for the Royal Naval Armament Depot, Antrim, and the other for the maintenance unit at Aldergrove, with which are linked the fortunes of RAF Sydenham. If these establishments are closed, there will be a vital change in this map: it will be blank in Northern Ireland. That is perhaps the clearest and most dramatic way of showing what this decision means for Northern Ireland.
It is no part of the case of any of the hon. Members representing Northern Ireland that this is evidence of a pull-out by the Government. Yet one must not underestimate the impact upon the public when they see the blank which will be created on the layout map of defence establishments if these decisions go through.
It is also no part of our case that economic considerations should take precedence over defence considerations. On the contrary, we believe defence to be the overriding interest, though we argue that the balance of decisions should be tempered by consideration of the economic and social consequences, and that insufficient has yet been said by the Government to prove that those factors have been adequately taken into account.
Again, it is no part of our case to deny that there should be the utmost economy in the application, and efficiency in the use, of whatever resources are to be devoted to defence. We are not arguing on that ground against these decisions,

except that we say the case has not yet been made out that a growth in efficiency will result if they are implemented, or that the money concerned will be better spent if it is not spent in the establishments which are to be closed.
The case argued from these Benches and from the Benches opposite does not rest primarily on economic or even upon social grounds. It is a case which is strong upon defence grounds, and we are of course considering tonight the Defence White Paper. I return to the map in the White Paper and the blank which will be placed over Northern Ireland. I argue that this represents an unjustifiable paradox in terms of defence.
Anyone who reads the Defence White Paper will realise very well what a change there has been over the last decade in the whole outlook and balance of our defence preparations. Nothing is heard nowadays of that magic place "East of Suez"—just a few relics are to be found in the White Paper. Even in the Mediterranean, we are told, the days of the British presence are numbered: one ship is to remain in the Mediterranean, and that is the guard ship at Gibraltar. The whole trend and shift is towards the defence of Western Europe, and above all, of these islands and the East Atlantic
There is a change, too, in the philosophy of defence. If not gone altogether, at any rate greatly weakened is the old theology of NATO which maintained that the function of the forces in the event of major war was to play it out for a few days until the crucial decision could be taken as to the employment of nuclear weapons. A different picture is now implicit in the White Paper. It is the picture of a war which will have to be fought out, perhaps at length, in which for us the crucial function will be the maritime and air defence of these islands and, above all, in the interests of the Alliance, the keeping open of the vital sea lanes between Western Europe and the United States. The Defence White Paper states:
The maritime forces of the United King dom are concentrated in the eastern Atlantic and Channel, through which areas Allied reinforcements, the majority of which are from the United States, must pass in time of tension or war, and where the threat to the maritime security of the Alliance is greatest.
It is in that direction that the emphasis of our defence thinking and of our defence


preparations is shifting. To match this we read in the Defence White Paper the striking and even alarming facts about the air-sea effort which the Soviet Union is putting forward so as to have it within its power to gain the domination of the Eastern Atlantic.
I am sure that I do not need to refer the House to the celebrated tribute which Winston Churchill paid to the indispensable function of Northern Ireland in the last war in keeping open the sea routes to these islands and making it possible for us to deny an enemy that command of the sea and of the air above it without which, if the enemy could have seized it, there would have been no future not only for the United Kingdom but for the Irish Republic. The fact is that more and more it is recognised that, in the defence of NATO, from the point of view of the alliance to which we belong, from the point of view of the alliance which for us is second in importance only to the survival of this nation itself, the island of Ireland is in the front line.
Defence now looks seawards; it looks Atlantic-wards; but what has happened, as so often in defence, is that the actual dispositions, the practical deductions, are lagging behind the facts of the real world and the propositions which in general terms Ministers are ready to voice. I venture to make the prediction that before very long we shall find a paradox in the decisions that the Government are attempting to defend tonight. Before very long we shall find a Government of the United Kingdom which will be concerned to shift Atlantic-wards the balance and deployment not only of the forces but of their supporting establishments; and in that shift the position of Northern Ireland will be seen to be specially vital.
So I say that, not merely because of its impact upon employment and upon morale in Northern Ireland, but within the framework of defence policy and thinking itself, what is being done is anomalous. The Under-Secretary of State repeated what was said in the White Paper—that, having to make economies and reductions in their defence budget over the next three years, the Government had decided to eliminate the establishments
which are not directly and immediately in support of front-line units".

There is a gross absurdity in this. What is the difference between establishments which are in direct support and establishments which are in ultimate support of the front-line units? It is not only the establishments which are in direct support which are therefore essential. The entire support to the front-line forces is equally essential; and it will seem to be an anomaly and absurdity that we should be actually trying to concentrate the fundamental support establishments in the most vulnerable parts of the United Kingdom.
So these are decisions which, if they are to be implemented—and I hope that there is still room for reconsideration—will be seen to be decisions out of date before they were reached. I am saying to the Government not only that they are doing something which will have a harsh impact upon Northern Ireland psychologically and economically—they know this, understand it and regret it—but that they are doing something which, from a defence point of view, is mistaken and will have to be reversed when the growing trends and the current changes in this nation's defence policy and outlook come to fruition.
There is, therefore, every reason way this debate should have taken place and why we should ask the Government not merely to give an assurance that the manner in which these decisions are carried out will be such as to have the minimum possible impact on Northern Ireland, but that the decisions themselves, in a context wider even than that of Northern Ireland as a whole, are to be looked at again. Otherwise a Minister will be coming to that Dispatch Box before many years are out to announce decisions which would not have been necessary nor so expensive nor so hasty if the present Government had not taken the already obsolete steps they are attempting to defend this evening.

9.45 p.m.

The Minister of State, Northern Ireland Office (Mr. Stanley Orme): This has been a serious, very detailed and critical debate of the Government's decisions. We welcome the fact that we have been able to have this debate so soon after the White Paper was published last Wednesday and to hear the views expressed from both sides of the


Northern Ireland divide. I have taken note also of what was said by the Opposition spokesman on defence.
I have been pressed about a meeting with the Secretary of State for Defence. The House will be interested to know that my right hon. Friend the Secretary of State for Northern Ireland at Stormont this afternoon met trade unionists who are involved in these defence establishments. I was present at the meeting.
I have conveyed to my right hon. Friend the Secretary of State for Defence the request for a meeting. He has advised me to tell the House that tomorrow he will meet the Northern Ireland Members to discuss this matter. If they then want to pursue further the matter of the trade unions, that is something for them to pursue with my right hon. Friend. But he will meet the Northern Ireland Members tomorrow in this House.

Mr. Powell: I am sure that the House is grateful to the Secretary of State for Defence for the message which has been conveyed. But may I ask—I am sure that I speak for all hon. Members concerned—for a little more flexibility, and that we might have the opportunity, when meeting the Secretary of State for Defence, of being accompanied by those who would certainly have something to contribute from the employees' point of view?

Mr. Orme: I shall convey the right hon. Gentleman's request to my right hon. Friend, but obviously this must be a matter for him. It might be a way of opening the discussion at the meeting tomorrow. What happens after that will be a matter for the hon. Members concerned and for my right hon. Friend.

Mr. Kilfedder: The right hon. Gentleman has already conveyed a message from the Secretary of State for Defence. Surely we can be given the assurance that the Secretary of State for Defence will receive us together with the trade unionists and shop stewards concerned? They are the people who are able to give the full facts to the Secretary of State.

Mr. Orme: I thought I had explained it very carefully. I ask the House to bear with me. I have carried out a request made during the debate, and an answer has been given during the debate. Hon Members can now pursue this further in their own right as Members of Parliament.

My right hon. Friend will read the Official Report tomorrow and will know the strength of feeling associated with the overall request. I have reported to the House what has already been agreed concerning the meeting tomorrow, and I hope that we may proceed on that basis.
The right hon. Member for Down. South (Mr. Powell) related the cuts to defence strategy. This is not a matter for me to argue to the House. It is a matter for my right hon. Friend the Secretary of State for Defence and his other Ministers. But I can say quite clearly that the closing of three maintenance units in Northern Ireland has nothing whatever to do with the overall defence strategy of the United Kingdom. It is related purely to the public expenditure cuts which have been made and are being made at the blunt end of defence expenditure. They have fallen on maintenance units throughout the United Kingdom.
It was said during the debate that, because of the economic circumstances, this is a difficult time for hon. Members who represent Northern Ireland constituencies. I say with some humility that it is a difficult time for Ministers who have a responsibility for Northern Ireland. There are circumstances appertaining to the economy which are making it exceedingly difficult.
Of course, the timing of these defence cuts, as the right hon. Member for Chesham and Amersham (Mr. Gilmour) knows only too well, comes in March of any year with the Defence White Paper, and this has coincided with economic circumstances in Northern Ireland and therefore has made the issues more difficult. But, as I said earlier, the fact is that this is a collective decision of Her Majesty's Government for which Northern Ireland Ministers bear their full share of responsibility, and I do not evade this issue in any way.
In the course of the debate, I have been asked a great many questions. To some of them, I shall reply by letter. But I hope that many of the others can be put to my right hon. Friend the Secretary of State for Defence when right hon. and hon. Members meet him.
I wish, however, to deal with two or three of the matters raised in the debate. The hon. Member for Antrim, North


(Rev. Ian Paisley) raised the torpedo question. These torpedoes will be in service for some time in the future, but they are being phased out and, frankly, there is no future for torpedo work on the basis of permanent work in Northern Ireland.
The hon. Member for Belfast, South (Mr. Bradford) raised the question of Blowpipe and Shorts' defence contracts. Let me say to the hon. Gentleman that some very mischievous statements were made in Northern Ireland over the weekend in the sense that they were dealing with people's employment and the threat to that employment. There is no truth in those reports. The contracts which are with Shorts will remain there. We do not see any change in that situation, and I am pleased to have this opportunity to clear up that matter.
A great deal of the argument centred round the fact that these defence establishments provide work—skilled work in the main—for 2,000 people in Northern Ireland. That is true. However, I would argue that if this had not happened at the moment, it would certainly have happened in the not too distant future. I made that point during Question Time last Thursday. It would be a false economy to base hopes on defence expenditure which can be changed and can be cut. What we need is a much sounder economic base in Northern Ireland. I do not have the time to go into the details of what the Government want to do. But right hon. and hon. Members will have read the statement that I made last Friday, which was widely reported.
I want, however, to answer this point about economic withdrawal. I understand how people feel about this. If they do not look at the whole picture, they may feel that this is a matter of the Government withdrawing. But the subvention this year will be more than £400 million. British Governments of both parties have put £119 million into the shipyards. Before IEL closed, the British Government put into that one firm £12·5 million in an attempt to keep a computer industry in Northern Ireland. The money that has gone into Shorts, Ben Sherman, Hughes Bakery, Regna, and matters such as providing the dredger

in Coleraine is an indication of Government expenditure.
If we look at investment, I agree that there has not been the new investment that we want. But there has been investment by firms which are already in Northern Ireland, and the House may be interested to know that this year industrial investment grants will be in excess of £30 million. That is a third of the total money expended, so that it must mean close on £100 million being spent this year in Northern Ireland on industrial investment. The total outlay of the Department of Commerce on this type of expenditure this year will run into several hundred million pounds. That compares with total Government expenditure already committed, which includes interventionist type of expenditure.
Of course an unemployment rate of 11·1 per cent. is unacceptable. The loss of another 2,000 jobs from defence establishments is an additional blow. But it is a false economy to think that the defence establishment can save employment. The answer is to have Government investment in the longer term which deals much more fundamentally with the problem.
There is a need for a fresh look at the Northern Ireland economy, and I have taken certain steps in that direction. First we shall look at electricity prices and the electricity industry. I have commissioned a study which will be chaired by the chairman of the Midlands Electricity Board. We are considering here a problem unique to Northern Ireland. The electricity industry there has to provide power for 1½ million people while coping with overheads which in Great Britain would be shared by 55 million people.
Because of the dearer electricity, the dearer fuel and the dearer transport, the Government have decided to set up an industrial strategy survey by which we can examine every aspect of the Northern Ireland economy. The hon. Member for Devon, West (Mr. Mills) asked what the Government were doing and whether we had a strategy. He has been a Minister for Northern Ireland and he recognises that even if there were no security or political problems, Northern Ireland, situated on the periphery of the United Kingdom,


would need special attention and help to enable it to survive as an important part of the United Kingdom. We have therefore ordered a full-scale inquiry involving senior officials from Whitehall as well as people from Northern Ireland. It will operate under my chairmanship. We shall be examining where Government money should go and how it should be redirected.

Mr. Craig: What is the average cost of providing new jobs in Northern Ireland? The Minister of State said that it was a false economy to keep these establishments open, but the work being done there is carried out economically and efficiently. We have not been told what

the savings are and still less what it will cost to provide 2,000 new jobs.

Mr. Orme: The House has been told that the savings are £3·5 million a year ad infinitum. It costs a great deal of money to create new jobs, but if they are to be created it must be on a much more permanent basis. That is the thinking behind the Government's proposals.
Political stability is vital for Northern Ireland. All hon. Members who have spoken in the debate have concentrated on this issue and I am sure that they recognise that we shall not create political stability——

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

BUSINESS OF THE HOUSE

Ordered,
That consideration of Lords Amendments to the Prevention of Terrorism (Temporary Provisions) Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Bates.]

PREVENTION OF TERRORISM (TEMPORARY PROVISIONS) BILL

Lords amendments considered.

Clause 9

OFFENCES UNDER PART II

Lords amendment: No. 1, in page 6, line 11, leave out from beginning to "shall" in line 33 and insert—
(1) If any person who is subject to an exclusion order fails to comply with the order at a time after he has been, or has become liable to be, removed under section 8 of this Act from Great Britain, Northern Ireland or the United Kingdom, as the case may be, he shall be guilty of an offence.

(2) If any person—

(a) is knowingly concerned in arrangements for securing or facilitating the entry into Great Britain, Northern Ireland or the United Kingdom of, or
(b) in Great Britain, Northern Ireland or the United Kingdom knowingly harbours,

a person whom he knows, or has reasonable cause to believe, to be a person who is subject to an exclusion order and who has been, or has become liable to be, removed from there under section 8 of this Act, he shall be guilty of an offence.

(3) A person guilty of an offence under subsection (1) or subsection (2) above".

10.1 p.m.

The Under-Secretary of State for the Home Department (Dr. Shirley Summerskill): I beg to move, That this House doth agree with the Lords in the said amendment.
The amendment is designed to clarify the clause in two respects. First, the offence of failing to comply with an exclusion order is to arise only after a per son has been removed or has become liable to be removed under Clause 8 rather than—as in the Bill as it left the Commons—at a time after he has been served with notice of the making of an exclusion order. Secondly, the amendment simplifies and improves the provisions

offences in relation to harbouring or facilitating the entry of persons subject to exclusion orders.
The hon. Member for Barkston Ash (Mr. Alison) will notice that the new subsection (1) has been drafted to take account of a point he raised on Third Reading.
The new subsection (2) simplifies the provisions creating offences of harbouring or facilitating the entry of persons subject to exclusion orders. It also removes an anomaly in the existing provisions, under which a person who harboured, or helped to enter the country, someone whom he knew to be subject to an exclusion order could commit an offence in circumstances in which the excluded person himself would not be committing an offence because he had not been served with notice of the making of the order.
The penalties for offences under the clause remain the same—that is, on summary conviction six months' imprisonment or a fine of £400, or both, or on conviction on indictment, five years' imprisonment or an unlimited fine, or both.

Mr. Michael Alison: We are obliged to the hon. Lady for that helpful explanation, and I am particularly grateful that she has taken account of the point I raised at the last moment on Third Reading.

Mr. J. Enoch Powell: I have no doubt that the amendment is both a simplification and an improvement. In particular from the point of view of Members from Northern Ireland, it is preferable to have Northern Ireland put in exactly the same position as Great Britain quite clearly on the face of the Bill. So we welcome, although it is little more than drafting, the improvement in the form.

Mr. Gerard Fitt: Throughout the debates on this type of legislation I have felt that I could not give full-hearted support to repressive legislation. But, when bomb factories are being found in London and other parts of the United Kingdom, and when it is only by the grace of God that there have not been many casualties or deaths as a result of bombs placed on trains, I can understand the feelings of hon. Members on both sides of the House.
However, in such legislation the House should be concerned not only with apprehending terrorists but, at the same time, with giving protection to people who are not terrorists and at whom suspicion may be cast. I am taking this opportunity to bring before the hon. Lady a case of which I am well aware in Northern Ireland. It relates strictly to the amendment, and it is fortunate that the amendment enables me to bring it before the House.
I know very well a young merchant seaman from Belfast. He has been at sea for a number of years. It is the only livelihood he has ever had. He likes going to sea and travels to many parts of the world. A few weeks ago, he joined a ship in Felixstowe and within a few hours the police arrived on board. They obviously knew whom they were after, because they called his name and then took him to Felxistowe police station. They questioned him for about an hour about what ships he had been on, what countries he had visited, and whether he liked being a merchant seaman. They then left him. The next day, he was questioned again, and asked whether he had ever belonged to a terrorist organisation, or knew anyone who did. He said that he had never been involved in such an organisation and did not want to be.
I know the young man concerned personally, and I know his family. Everyone knows my opposition to terrorism, and if I had the slightest doubt about my assertion that that young man is not associated with any terrorist group I should not be making this case. After he had been questioned again for about an hour on the second day, the police went away. Five days later they came back to tell him that he was to be served with an exclusion order because they thought that he knew something about terrorists in Northern Ireland.
He proclaimed his innocence again and said that he was prepared to prove it before any court. The police said that that was not possible and that he would be excluded. They served him with the order and put him on a plane at Heathrow and he subsequently landed in Northern Ireland.
That young seaman now cannot go back to sea. He has lost the only livelihood

he has ever known. He can never sail out of ports in Britain. If he is lucky enough to join a ship sailing for Belfast, there is no guarantee that it will not call at a port in the United Kingdom. If it goes back to Belfast, it seems that he will be all right, but if it goes to London, what will happen to him? Will he have to report to the police and say that he had arrived in London accidentally? Will the shipping company or the master be regarded as having brought back into the United Kingdom someone subject to an exclusion order?
This is a difficulty which is not covered in this legislation. I hope that further representations can be made to the Secretary of State. I wonder whether the Minister can give me any further ideas on how I, as this young man's Member, can approach his Department and discover what suspicion attaches to this man.
I believe that someone in Belfast, who may be a member of a terrorist organisation and who dislikes this young man because he is not a member, has passed information to the police here. It happens very frequently in Northern Ireland that if a person does not agree with a terrorist organisation, the members of the organisation can lay false information against him to try to put him in such a position that he will become a member.
I can understand the necessity for this legislation, particularly when bombs are being found in London, but the greatest protection should be given to persons who are to be subjected to exclusion orders.
I ask my hon. Friend the Minister whether she is aware of the case that I have mentioned and what steps I could possibly take to clear my mind. I should not like to think that I knew the person involved, and his family, and that he had been engaged or was suspected of having been engaged in terrorism when I did not know about it, because I do not associate with terrorists of any description in Northern Ireland. I should like the position clarified, for my own protection.
I hope that my hon. Friend will be able to give me an answer, either tonight or later in writing, as to what will happen if that young boy, who still has a merchant seaman's ticket, happens to join a ship in Belfast, perhaps tramp around


the world and then return to London. Will he be liable to arrest and imprisonment, or to a fine, because the ship has arrived back in London?

Dr. Summerskill: I hope that my hon. Friend the Member for Belfast, West (Mr. Fitt) appreciates that I cannot discuss individual cases in the context of the debate on this amendment. However, he can be assured that the Home Secretary has given very careful consideration to the case that he has raised. If my hon. Friend will contact us again, in writing or in person, the Home Secretary will take very careful note of everything that he says.

Question put and agreed to.

Clause 10

CONTRIBUTIONS TOWARDS ACTS OF TERRORISM

Lords amendment: No. 2, in page 6, line 41, leave out from beginning to "shall" in line 7 on page 7 and insert—
(1) If any person—

(a) solicits or invites any other person to give or lend, whether for consideration or not, any money or other property, or
(b) receives or accepts from any other person, whether for consideration or not, any money or other property,

intending that the money or other property shall be applied or used for or in connection with the commission, preparation or instigation of acts of terrorism to which this section applies, he shall be guilty of an offence.
( ) If any person gives, lends or otherwise makes available to any other person, whether for consideration or not, any money or other property, knowing or suspecting that the money or other property will or may be applied or used for or in connection with the commission, preparation or instigation of acts of terrorism to which this section applies, he shall be guilty of an offence.
( ) A person guilty of an offence under subsection (1) or subsection (1A) above

Dr. Summerskill: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Speaker: With this we may discuss Lords Amendments Nos. 3, 4 and 5.

Dr. Summerskill: These amendments constitute a substantial redrafting of subsection (1) of the new clause, which deals with contributions to acts of terrorism, and contain minor adjustments to the

remainder of the clause. The amendments also bring within the scope of the clause the case where money is raised not by way of a gift but by way of a bogus sale.
There was some criticism of the drafting of the clause, on stylistic grounds, on Report. These amendments reflect the Government's response to these criticisms and attempt to clarify the sense of the clause in general. We have not gone all the way to meet some of the points which were made, but we believe the amended version is a significant improvement on the clause as at present drafted.
The only change of substance we have made is, by the first amendment, to include within the scope of the clause money raised not by way of a gift but by way of a bogus sale, for example by selling flags, or by a raffle. We believe that an amendment to this effect should be made so that there is no possibility of a technical escape on these grounds.
The second amendment is consequential on the first. The third and fourth amendments are purely drafting, and meet a criticism of the right hon. Member for Down, South (Mr. Powell) of the grammatical construction of the words "and intended".

Mr. Powell: Another place has found the way to fulfil the prediction that I made on Report—namely, that it was not beyond the capacities of the parliamentary draftsmen to turn Clause 10, as it then stood, into something more easily recognisable as English. In particular, I think that future generations will be grateful that we have been relieved from the spectre of a pronoun preceding its antecedent. In any case, however—purist or not—the result of the amendment is a decided improvement not merely stylistically, as the hon. Lady said, and not merely grammatically even, as I would say, but in terms of intelligibility. I welcome it.

10.15 p.m.

Mr. Alison: Did I understand the hon. Lady to say that these amendments cover the additional case of money raised by way of bogus sale—for example, by a raffle? Without in any way seeking to detract from the clarity and improvement to which the right hon. Member for Down, South (Mr. Powell) referred, I


would like the hon. Lady to point out what operative phrases in the amendment cover the point of a sale or a raffle? Is it the phrase "for consideration"? If it is that phrase, again it is of Delphic ambiguity. It does not seem to be particularly clear. I take it that it is the standard phrase to cover a sale or raffle.

Dr. Summerskill: Yes, the hon. Gentleman is right in his assumption.

Question put and agreed to.

Subsequent Lords amendments agreed to.

Clause 11

INFORMATION ABOUT ACTS OF TERRORISM

Lords amendment: No. 6, in page 7, line 22, leave out:
knows or believes that he".

Dr. Summerskill: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this amendment we may discuss Amendments Nos. 7, 8, 9 and 10.

Dr. Summerskill: These amendments are designed to do two things. First, they clarify the drafting of the clause and, we hope, meet some of the criticisms of drafting expressed on Report in the House of Commons. Secondly, they introduce a provision in relation to Northern Ireland, by which a person can avoid committing an offence by disclosing information within the scope of the clause if he discloses it to a member of the Armed Forces instead of to a constable; that is, the saving will apply both in the case of the police and the Army.
Subsection (1) has been redrafted so that the position of the words "knows or believes" is altered in accordance with criticism of the original drafting, principally by the right hon. Member for Down, South (Mr. Powell). We accept that the new structure is clearer and perhaps more logical than that of the original clause.
We took note of the point that has been made on several occasions, that the requirement to disclose information only to a constable might be too restrictive,

particularly in relation to Northern Ireland. We therefore decided that a logical and desirable extension of the clause, in view of the particular conditions prevailing in Northern Ireland, would be to provide that, in Northern Ireland, information might also be disclosed to a member of Her Majesty's Forces. However, we think it impracticable to go any wider than this in the list of those to whom the information may be passed.
We have looked closely at the terms of this clause in accordance with the undertaking given by the Home Secretary on Report in the House of Commons. These amendments are the result of that consideration and represent all that we can suggest to clarify and limit this clause without destroying its basic purpose.
On Report in the Commons the question was raised whether the use, in Northern Ireland, of the "confidential telephone" would be sufficient to comply with the requirement to disclose the information to a constable. I can give the House an assurance that information given over the confidential telephone is received by the police and that details are recorded. In those circumstances, disclosure of information in this way would be disclosure to a "constable" and, as a detailed record is kept, the person disclosing the information would have no difficulty in establishing that he had given it.

Mr. Powell: I am grateful to the hon. Lady for the explanation she has given of the specific application to Northern Ireland. It is certainly desirable that the giving of information to a member of Her Majesty's Forces should have been put there upon the same basis as the giving of information to a constable.
As regards the rest of the amendments, there are two guests whom we miss this evening at this feast. One is the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn), whose heart would be rejoiced by observing that the position in Scotland has been more delicately sorted out from the position in England and Wales as a result of these amendments. I promise the hon. Lady that at the next opportunity I shall draw the matter to the attention of the hon. and learned Gentleman.
It is a pity that we do not have in the Chamber the hon. Member for Bethnal Green and Bow (Mr. Mikardo), for it is with him that I must share any merit that attaches to having drawn attention to the absurdity of anyone only believing that he has information, and not knowing that he has information. The amendments deftly dismiss that logical or epistemological difficulty. We shall leave the clause in a better condition if we agree to make the Lords amendments.

Mr. A. J. Beith: I am glad that we shall be able to leave the clause in a better condition than when it last appeared before us.
I do not want to sound churlish, but I believe it to be right in principle that on occasions Governments should accede to pressure from Back Benchers to include new clauses. That which is before us tonight is partly the work of the hon. Member for Islington, South and Fins-bury (Mr. Cunningham), whose original ideas found their way into a clause that came before the House.
The criticism that I felt had to be made when last the clause appeared before us—this is a matter that must still be borne in mind—is that I did not believe any Northern Ireland Minister had given serious consideration to the terms of the clause. I do not believe that any Northern Ireland Minister could have envisaged such a clause applying in Northern Ireland without the reference to Her Majesty's Forces and without clarification about the use of the confidential telephone.
The clarification throws a new light on the confidential telephone operation. One of its features is that it is anonymous—[Interruption.] Perhaps the right hon. Member for Down, South (Mr. Powell) finds my English a little confused at this time of night.

Mr. Powell: No, I am following the hon. Gentleman's logic.

Mr. Beith: I am sure that the right hon. Gentleman is with me on this issue. If one of the advantages of the confidential telephone is that it is anonymous and that information can be given without a person identifying himself as giving it, the subsequent exercise in which he has

to say to the police "I was the person who telephoned you at 11.42 on Tuesday 14th March and gave the following information, which you can check from your records" may not be entirely what was envisaged by the hon. Lady. I am not quite sure that it was envisaged when the confidential telephone was first devised. To some extent I rest my willingness to leave the clause as the Lords now recommend it on the fact that it may be tidied up by another amendment.
Power will remain in the Bill for the Attorney-General for Northern Ireland to ensure that prosecutions are not undertaken under this clause in inadvisable circumstances. I as sure that there will be many inadvisable circumstances in which prosecutions either should not be undertaken or will be impossible to undertake.
That is not because we do not wish to see the same degree of co-operation from the public in Northern Ireland as has clearly assisted the police in Great Britain in their recent successful investigations. It is because in some cases conditions in Northern Ireland make it genuinely difficult for people to declare themselves, because the public declaration, the appearance in court, and matters of that sort have been associated—this is inevitably the consequence—with the giving of information. That is genuinely feared in Northern Ireland.
It was pointed out when the clause last appeared before us that once it appears before a Northern Ireland court, and there is the defence of a genuine fear of intimidation, it is uncertain how subsequent prosecutions can successfully follow.
I share with UUUC Members a desire to see a framework of law in Northern Ireland as broadly similar to that in the rest of the United Kingdom as is possible. On those grounds I want to see the clause remain more or less as it stands, but we must be frank about some of the difficulties. I am not quite sure whether all of the difficulties have been clarified by what the hon. Lady has said.

Question put and agreed to.

Subsequent Lords amendments agreed to.

Schedule 3

SUPPLEMENTAL PROVISIONS FOR SECTIONS 1 TO 13

Lords amendment: No. 11, in Schedule 3, page 16, line 4, leave out from "Proceedings" to end of line 7, and insert:
shall not be instituted—

(a) in England and Wales for an offence under section 1, 2, 9, 10 or 11 of this Act, except by or with the consent of the Attorney General, or
(b) in Northern Ireland for an offence under section 9, 10 or 11 of this Act, except by or with the consent of the Attorney General for Northern Ireland."

Dr. Summerskill: I beg to move, That this House doth agree with the Lords in the said amendment.
This is a purely drafting amendment. It amends paragraph 3 of Schedule 3, which prevents proceedings from being instituted for offences under the Bill except with the consent of the Attorney-General.
Its purpose is to make absolutely clear the fact that the reference to the Attorney-General in Schedule 3 includes a reference to the Attorney-General for Northern Ireland in relation to proceedings in Northern Ireland. In practice, under Section 10 of the Northern Ireland Constitution Act 1973, the two offices are held by the same person. However, when authorising prosecutions in Northern Ireland, the Attorney-General does so as "Attorney-General for Northern Ireland" and the amendment therefore meets this purely technical point.

Question put and agreed to.

CONSOLIDATED FUND (No. 2) BILL

Considered in Committee; reported without amendment.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 93 (Consolidated Fund Bills), and agreed to.

Bill accordingly read the Third time and passed.

EDUCATION (SCOTLAND) BILL [Lords]

Order for Second Reading read.

Ordered,
That the Bill be referred to the Scottish Grand Committee.—[Mr. John Ellis.]

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. John Ellis.]

SOUTH LANARKSHIRE (INDUSTRIAL DEVELOPMENT)

10.27 p.m.

Mrs. Judith Hart: In this Adjournment debate I wish to deal with the subject of unemployment in the area of Lesmahagow—an employment exchange in the County of Lanarkshire which now has the highest unemployment rate in the United Kingdom. In the past it had an unemployment rate of 29 per cent. That figure now stands at 22 per cent. I know that my right hon. Friend the Minister of State, Scottish Office, will agree that the area has a persistent unemployment problem.
Perhaps I may set out the history of the problem. In the early 1960s Lesmahagow was an area consisting predominantly of miners and associated workers. During the 1960s pit closures in Scotland led to the displacement of miners and consequently to growing unemployment in the area. This was largely inevitable. There were doubts and arguments about the pace of closures in Scotland during the 1960s, but what was clear was that, give or take a year or two, the Southern Lanarkshire coalfields did not have a future. Furthermore, there were geological difficulties which meant that the area was almost doomed, either at that time or within a few years, to pit closures.
The area was not at the centre of the argument about fuel policy. It was an area about which there were great doubts. Pits in the area took advantage of the Labour Government's subsidy for maintaining them on social grounds. One of the last pits to be closed—Auchlochan, in Coalburn—was kept open for over a year as a result of the social subsidy.
Ultimately our pits were closed. We now have a few miners in the area who travel to pits in Ayrshire. Other than that we rely on the limited amount of employment that has been provided on the small industrial estates in Lesmahagow and in villages such as Douglas. These estates are in villages lying just off the main artery of the A74, which is undergoing a number of improvements to bring it up to motorway standard. We hope that it will reach that standard in a few years. In those villages there are various small factories which would not have come into being without the policies pursued by the Labour Government between 1964 and 1970. All were created during that period.
What do they provide? They provide most valuable jobs—140 here, 40 in another factory, 50 elsewhere. Many of the jobs are for women. Male unemployment in the area has continued to worsen. Since 1969—and I remember, because I was a member of the Cabinet, telling my Cabinet colleagues that in my constituency I had a 29 per cent. unemployment rate—we have remained in this desperate situation, with deep male unemployment. I know that the Minister of State is fully aware of this. I do not expect from him a final answer to the problem tonight.
What is relevant is that since 1968, to my knowledge, there has been the proposal for a new town at Stonehouse.
Stonehouse lies in the northern part of my constituency and is just five minutes away from the A74. Since 1968–69 there has been a clear understanding that a new town was likely to be developed at Stonehouse. We have gone through the various phases of Government decision. The Labour Government's decision was confirmed by the Conservative Government which followed. We have had a public inquiry, designation, and the beginning of building work. The main purpose of this new town for my constituency, and, I believe, for the Government, was to resolve the unemployment problem of these neglected towns and villages of South Lanarkshire following pit closures.
A new town, whether large or small, creates an industrial and social environment to which industry is attracted. This has been the experience with every new town in Britain. My hon. Friend the Member for East Kilbride (Dr. Miller)—

I represented his constituency at one time—will confirm that. New towns have something extra in terms of the total environment that industrial estates, advance factories and people who are dedicated to introducing industry to areas which need jobs can achieve.
Had it not been that since 1968–69 it had been confidently expected that the new town of Stonehouse would go ahead, other things might have happened. For example, the then Board of Trade, replaced by the Department of Industry in its responsibilities, and recently succeeded by the Scottish Office in its responsibilities, might have taken a different attitude to the 22 per cent. unemployment rate in the Lesmahagow area, had it not been confidently assumed that Stonehouse new town would go ahead and that it would, even with a delay of three or four years, be the answer to the problems of the villages and small towns in my constituency still suffering from the effects of the pit closures of the 1960s.
My right hon. Friend the Minister of State has been very good about meeting all the conflicting interests. He granted the chairman of my district council and myself a full hour's meeting when we came to put our point of view to him. Three days ago I had a very friendly and constructive meeting with the members of the Strathclyde Regional Council who oppose the decision to continue with Stonehouse new town.
There are two deeply-held economic and philosophical views. One is that if we continue with Stonehouse new town we shall diminish the capacity of the West of Scotland conurbation—I carefully do not say "Glasgow"—to revive and revitalise its area. The other view is that to revitalise an area one does not necessarily have to create industry in the centre of a conurbation. One can contemplate, although it is a new thought, that people do not necessarily travel into a conurbation to work; they may travel out from it to work. Indeed, the more thought one gives this proposition the more attractive it is, because it would solve the traffic and employment problems and, for the people who travel out to work it would not detract from the vitality of living in the city.
There is also the possibility—I know that my right hon. Friend the Minister


of State is well aware of it—that one need not go ahead with the original concept of the target population of Stone-house new town in order to meet the industrial needs of the area. It is possible, as the East Kilbride and Stone-house Development Corporation believes, to have a modified population target, providing for a transfer of fewer people in housing and population terms but nevertheless creating the essential total environment that will succeed in attracting industry.
I am sure my right hon. Friends will give most serious consideration to finding a way through the dilemma that we are facing in the conflict between the regional council and the views of all my constituents of every party and the Lanark District Council. Unemployment in my constituency is the worst in the United Kingdom, and the situation demands the continuance of the industrial element in the development at Stonehouse new town.
We are at a new point in our consideration of new town development. I have lived in a new town, worked on research for a new town development corporation, and represented a new town. The vision of the 1940s is not necessarily a vision for all time. We need to consider the regeneration and revitalisation of the conurbations, but if a change of policy is required in the light of careful, thoughtful reconsideration of the objectives and the need to reconcile housing and employment in terms of the regeneration cities, the right moment to do that is not when one betrays the expectations, hopes and what seemed certainties of resolving the highest rate of unemployment in the United Kingdom.

10.43 p.m.

Mr. Alexander Wilson: I wish to support my right hon. Friend the Member for Lanark (Mrs. Hart) in this crucial debate. I hope that my right hon. Friends on the Front Betch will take cognisance of the debate but that it will not engender bitterness because of Press statements and the utterances of some people on the Strathclyde Regional Council who have misinterpreted the term "urban deprivation"
I have lived in this area all my life. We have lost thousands of jobs, and I have seen pit closures right through my

native village and into my own neighbouring constituency of Hamilton. We have lost 25,000 mining jobs in the past 20 years, at least 2,000 railway jobs in the last 15 years, and at least 1,000 jobs in the knitwear industry. When my hon. Friend receives the representatives from Strathclyde Regional Council will he ask them whether they know the meaning of the term "rural deprivation"?
For long this area has hoped that the Labour Government would come to a concrete, quick decision to establish a new town in the Stonehouse area. It was pressure from the Labour Party that forced the previous Tory Government to raise their sights in relation to housing development in the area. We have now reached the stage at which we have accepted the concept of the new town. My hon. Friend the Member for East Kilbride (Dr. Miller), who is in his place as usual, knows how industry is attracted when a new town is envisaged by central Government.
I throw my full weight behind my right hon. Friend the Member for Lanark on behalf of my constituency. I may be using harsh words, but the utterances of certain members of the Strathclyde regional authority are made through sheer ignorance of the locality. The convenor of that authority said that if Stonehouse went ahead, Larkhall, in my constituency, would become a ghost town. My view is that if Stonehouse does not go ahead Larkhall will become a ghost town. In Larkhall the unemployment rate is far too high for comfort. Why has a factory of 127,000 sq. ft. been empty for years? A new town in Stonehouse would attract the necessary industry, as the Director of East Kilbride and Stonehouse Development Corporation says. The new town will be a saviour in the area. Lanark District Council and Hamilton District Council are both agreed on the necessity of setting up Stonehouse new town. There has been a public hearing, and my constituency and Lanark constituency have said that the setting up of the new town would alleviate the urban deprivation from which the area has suffered for so long.
I intervene in the debate because a large area in my constituency, including Larkhall, Netherburn and Ashgill, is involved. The evidence is there, the hearings have been held, the local authorities


have put their evidence, and the Members of Parliament in the areas involved have made their representations. It is time for the Government to make up their mind and decide that Stonehouse new town should go ahead.

10.49 p.m.

The Minister of State, Scottish Office (Mr. Bruce Millan): My right hon. Friend the Member for Lanark (Mrs. Hart) put her case in a fair and moderate way, but I know that she feels extremely strongly about the problems of this area and, in particular, about the uncertainty that has inevitably been created by the decision of the Strathclyde Regional Council that it would wish the proposed Stonehouse new town to be abandoned.
I start by saying something about the new town, which is the key factor in the Lesmahagow situation. As my right hon. Friend knows, I have had meetings about this matter not only with the regional council but with the East Kilbride and Stonehouse Development Corporation, and with the Hamilton and Lanark district councils. My right hon. Friend was present. I can fairly say, therefore, that I have some understanding of the different points of view on this issue. As my right hon. Friend has said, there are two strongly held points of view, and the final decision, which is for the Secretary of State, is not easy.
The regional council has taken the strategic decision that, in producing its regional report, it will have a number of objectives, of which the most important are to arrest the present drain of population from the main conurbations of the region to other parts of the region or out-with it and to revitalise the economic heart of the region and improve the social and economic conditions of those living in areas of poor opportunities and urban deprivation, whether in Glasgow or other parts of the region.
These main objectives are very much in line with the Government's thinking for the region as a whole in this matter, as my right hon. Friend appreciates. We have to listen extremely carefully to anything that the regional council says, because by statute it is specifically the regional planning authority for the area.
On the other hand, there is a very strong case for Stonehouse new town. That case was looked at in 1974 by the Government

in the then context of recommendations from certain planners that Stonehouse should no longer go ahead. At that time—this was before the establishment of the regional council and its appraisal of the situation—we accepted, and it was a balanced decision, that the new town should go ahead.
We agreed to the go-ahead for very much the reasons that my right hon. Friend the Member for Lanark and my hon. Friend the Member for Hamilton (Mr. Wilson) have indicated. We believed and still believe, that a new town at Stonehouse would be a very attractive site for new jobs, not only for the immediate area but for the region as a whole. Indeed, the site itself is extremely attractive. We had in mind at the time, and have in mind now, that there are certain areas around Stonehouse—Larkhall and Lesmahagow included—where there are very serious unemployment problems. They did and do look to Stonehouse new town as an important contribution towards the solution of those problems.
We accept that the regional council has adopted a strategy to which it has given a good deal of thought, that in its essential principles is very much in line with what the Government would like to see it do for the region. On the other hand, that strategy involves it, as it believes, in abandoning the new town, which, however, is looked upon as being equally important for the area concerned in solving these very difficult problems of unemployment.
Any decision that we reach on this matter is not going to be easy, and if a decision were taken—no decision has yet been reached—to abandon the new town, it should not be taken as an indication that we have abandoned all hope for the area and in particular it should not be taken as any kind of indication that we are not concerned with the extremely serious problems of Lesmahagow and other parts of my right hon. Friend's constituency.
When I met my right hon. Friend some weeks ago, I promised to visit the area, and I did so quite unofficially. I hope that she does not mind my having done that. I did not meet anyone officially from the regional council or from local authorities in the area. I made a quite unofficial visit less than a fortnight ago, on 12th March, so that I could


see the area for myself. I accept what my right hon. Friend said about the area, about its history, and about the very serious problems that there are, especially in Lesmahagow at present.
There is a sense in which the unemployment figures are misleading, for certain technical reasons. However, I do not place any emphasis on that, because even if some of the technical considerations are eliminated one is still left with a severe and long-standing unemployment situation in the Lesmahagow area—a situation that has been accentuated by the fact that the Turfholm mill, which used to provide a good deal of employment in Lesmahagow—

Mrs. Hart: That was for women.

Mr. Millan: I accept that, but it is not providing any kind of employment at all at present, and that is one of the serious aspects of the situation in Lesmahagow.
Just as the previous Labour Government gave special attention to Lesmahagow

by giving it special development area status in November 1967—

Mrs. Hart: I apologise for interrupting my right hon. Friend, but will he kindly note that in this discussion of the desperate situation concerning my constituency, there is no representative of the Scottish National Party present?

Mr. Alexander Wilson: That goes for my constituency, too.

Mr. Millan: I have noted that. I have very limited time, but I might just say about that factory and other premises in the Lesmahagow area that the industrial development division of my Department—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at three minutes to Eleven o'clock.